Microsoft Seeks Partners For a New Run at Yahoo

Microsoft positioning itself for a new run for Yahoo Inc.'s search business, has approached other media companies in recent days about joining it in a deal that would effectively lead to Yahoo's breakup, say people familiar with the discussions. More>>

Microsoft Launches Subscription Services For Office

Microsoft announced the launch an all-in-one security and productivity software subscription service for consumers called Equipt that combines Microsoft Office and Windows Live OneCare. There service will be sold through Circuit City starting in this month. The service will cost $69.99 for a one-year subscription. Each subscription will be good for three home computers.

According to Ina Fried of CNET, the idea behind the subscription service is to convert more new PC buyers into Office buyers. It plays on the fact that although most people don't buy Office at the same time as a computer, many do purchase a security software subscription and Microsoft is trying to tap into the fact that while many people would rather find a copy of Office that they don't have to pay for (either an older version or a pirated copy) they are willing to pay for security software.

Ask.com Drops Maps Switches To Microsoft Earth

Ask.com has migrated off of their mapping platform and onto Microsoft's Virtual Earth platform. Ask follows suit of many portal sites letting Microsoft make the heavy investments in infrastructure, imagery, photography acquisition, data updates, etc hence allowing them to focus on developing applications that benefit end users. Other portals incorporating Microsoft's Virtual Earth include YellowPages.com, Superpages.com, and WhitePages.com among many.

Microsoft - Verisign Partner For Online Health

One area where Microsoft is leaving Google behind is in online health care. Today Microsoft teamed up with Verisign to offer OpenID for users of HealthVault, which is a free service that enables consumers to store and manage their health information online.

"HealthVault is about empowering people to take control of their personal health information, and that means making their Web experience easier while also helping them safeguard their privacy," said George Scriban, senior product manager, Microsoft Health Solutions Group. "That's why we're happy to give our users the option of using a VeriSign OpenID with a VIP credential."

Microsoft is moving very fast in this space because it is doing the opposite of what it traditionally does. The company is partnering with others versus building. Where as Google is doing the opposite building versus partnering. Further there is a hesitancy among some companies to use Google's health solution due to the fact that the company lacks a clear privacy statement on patient information. Online advertising in the health care vertical command some of the juiciest add dollars and given the aging population it will be a long wave to ride.

Bill Gates: Windows Usability Going Backwards

The Seattle Post reprinted an email by Microsoft Chairman Bill Gates that he sent to his lieutenants in 2003 on the usability of Microsoft products. The article describes him as "chief rabble-rouser", and even the Microsoft co-founder -- who champions the "magic of software" -- isn't immune to the frustrations of everyday computer users.

---- Original Message ----

From: Bill Gates
Sent: Wednesday, January 15, 2003 10:05 AM
To: Jim Allchin
Cc: Chris Jones (WINDOWS); Bharat Shah (NT); Joe Peterson; Will Poole; Brian Valentine; Anoop Gupta (RESEARCH)
Subject: Windows Usability Systematic degradation flame

I am quite disappointed at how Windows Usability has been going backwards and the program management groups don't drive usability issues.

Let me give you my experience from yesterday.

I decided to download (Moviemaker) and buy the Digital Plus pack ... so I went to Microsoft.com. They have a download place so I went there.

The first 5 times I used the site it timed out while trying to bring up the download page. Then after an 8 second delay I got it to come up.

This site is so slow it is unusable.

It wasn't in the top 5 so I expanded the other 45.

These 45 names are totally confusing. These names make stuff like: C:\Documents and Settings\billg\My Documents\My Pictures seem clear.

They are not filtered by the system ... and so many of the things are strange.

I tried scoping to Media stuff. Still no moviemaker. I typed in movie. Nothing. I typed in movie maker. Nothing.

So I gave up and sent mail to Amir saying - where is this Moviemaker download? Does it exist?

So they told me that using the download page to download something was not something they anticipated.

They told me to go to the main page search button and type movie maker (not moviemaker!).

I tried that. The site was pathetically slow but after 6 seconds of waiting up it came.

I thought for sure now I would see a button to just go do the download.

In fact it is more like a puzzle that you get to solve. It told me to go to Windows Update and do a bunch of incantations.

This struck me as completely odd. Why should I have to go somewhere else and do a scan to download moviemaker?

So I went to Windows update. Windows Update decides I need to download a bunch of controls. (Not) just once but multiple times where I get to see weird dialog boxes.

Doesn't Windows update know some key to talk to Windows?

Then I did the scan. This took quite some time and I was told it was critical for me to download 17megs of stuff.

This is after I was told we were doing delta patches to things but instead just to get 6 things that are labeled in the SCARIEST possible way I had to download 17meg.

So I did the download. That part was fast. Then it wanted to do an install. This took 6 minutes and the machine was so slow I couldn't use it for anything else during this time.

What the heck is going on during those 6 minutes? That is crazy. This is after the download was finished.

Then it told me to reboot my machine. Why should I do that? I reboot every night -- why should I reboot at that time?

So I did the reboot because it INSISTED on it. Of course that meant completely getting rid of all my Outlook state.

So I got back up and running and went to Windows Updale again. I forgot why I was in Windows Update at all since all I wanted was to get Moviemaker.

So I went back to Microsoft.com and looked at the instructions. I have to click on a folder called WindowsXP. Why should I do that? Windows Update knows I am on Windows XP.

What does it mean to have to click on that folder? So I get a bunch of confusing stuff but sure enough one of them is Moviemaker.

So I do the download. The download is fast but the Install takes many minutes. Amazing how slow this thing is.

At some point I get told I need to go get Windows Media Series 9 to download.

So I decide I will go do that. This time I get dialogs saying things like "Open" or "Save". No guidance in the instructions which to do. I have no clue which to do.

The download is fast and the install takes 7 minutes for this thing.

So now I think I am going to have Moviemaker. I go to my add/remove programs place to make sure it is there.

It is not there.

What is there? The following garbage is there. Microsoft Autoupdate Exclusive test package, Microsoft Autoupdate Reboot test package, Microsoft Autoupdate testpackage1. Microsoft AUtoupdate testpackage2, Microsoft Autoupdate Test package3.

Someone decided to trash the one part of Windows that was usable? The file system is no longer usable. The registry is not usable. This program listing was one sane place but now it is all crapped up.

But that is just the start of the crap. Later I have listed things like Windows XP Hotfix see Q329048 for more information. What is Q329048? Why are these series of patches listed here? Some of the patches just things like Q810655 instead of saying see Q329048 for more information.

What an absolute mess.

Moviemaker is just not there at all.

So I give up on Moviemaker and decide to download the Digital Plus Package.

I get told I need to go enter a bunch of information about myself.

I enter it all in and because it decides I have mistyped something I have to try again. Of course it has cleared out most of what I typed.

I try (typing) the right stuff in 5 times and it just keeps clearing things out for me to type them in again.

So after more than an hour of craziness and making my programs list garbage and being scared and seeing that Microsoft.com is a terrible website I haven't run Moviemaker and I haven't got the plus package.

The lack of attention to usability represented by these experiences blows my mind. I thought we had reached a low with Windows Network places or the messages I get when I try to use 802.11. (don't you just love that root certificate message?)

When I really get to use the stuff I am sure I will have more feedback.


Response

.... Original Message ....

From: Will Poole
Sent: Wednesday, January 15, 2003 1:27 PM
To; Amir Majidimehr; Chris Jones (WINDOWS)
Co-" Dave Fester; Rick Thompson
Subject: FW: Windows Usability Systematic degradation flame

Guess we should start working on a list of things that need to be fixed withe web sites. W1J, and with windows, and identify owners. Bill’s frustration is not unreasonable.

Start-Up Sues Google Potential $1 Billion In Play

LimitNone LLC, a tiny start-up that builds a tool for migrating customers off Microsoft's Outlook email software and on to Google’s Gmail as filed a trade secrets lawsuit against Google.

The suit claims that Google had initially promoted the migrating tool. Google then copied the idea and went into competition with LimitNone.

LimitNone is seeking reimbursement from Google of actual damages, attorney’s fees and punitive damages. LimitNone’s case details the company’s meetings starting in March 2007 with Google to build a tool it named, “gMove.” This tool was used to move the e-mail, address books and calendars of corporate customers from Microsoft’s Outlook to Gmail. David Rammelt, lead plaintiff’s attorney said that LimitNone had been told by Google that 50 million subscribers was "just too big to come from someone else." A simple calculation of the lost revenue for LimitNone "very quickly gets you up to about $950 million."

The case hangs on the fact that LimitNone claims it entered into a confidentiality deal with Google to share trade secrets of its e-mail migration tool with the search giant’s engineers, sales people and key Google Apps customers.

The meat of the case is the fact that Google introduced a free, competing e-mail migration tool earlier this year called "Google Email Uploader." The lawsuit alleges that this tool is "almost identical" to gMove and that "both operate under a similar conceptual design."

Following news that Google had decided to compete with it instead of continues its partnership, LimitNone shifted its business to focus on the emerging market for business software designed to run on the Apple's iPhone.

Ballmer Says Google A One Trick Pony

In an interview with the Financial Times Microsoft CEO Steve Ballmer gives credit to Google for seeing the potential of search and innovating in search. Ballmer admits:

1. Microsoft didn't see the business model for search.
2. The five year development cycle of Windows partly to blame.
3. Online represents a huge opportunity for Microsoft.
4. Live Cashback is not a strategy to buy market share.
5. Cloud computing and world’s media moving online.
6. Google is a single product company.

Here is the interview transcript.

FINANCIAL TIMES: So, you finally got rid of that other guy. Now we want to know what you’re going to do.
STEVE BALLMER: Onward and upward, baby. Onward and upward.

FT: What does it mean to lose Bill Gates from his full-time role?
MR BALLMER: Well, in a way you lose a talent like Bill, you lose a talent like Bill. But the culture of the place is built on a lot of things. It’s not just built on the leaders; it’s built on the leaders and the experiences that we’ve had, and the successes and the failures. At some point it’s not what leaders say, it’s the accumulation of sort of direction and experiences, successes and failures. The culture builds up itself.

I think his legacy will sustain itself, the kinds of things, you know, Bill values - intelligence and intensity. I don’t think Bill going away actually will detract from the culture. I’ve seen this at Wal-Mart. I mean, Sam Walton has been gone now quite a while, and yet the culture lives on in many ways. So, I don’t really think that’s a very big deal at all.

FT: How have you prepared personally for this?
MR BALLMER: [In college] we had to read some passages from [Max] Weber on the routinisation of charisma, talking about how governments in this case primarily move on and transition after a charismatic leader. So, you could say I’ve thought a little bit, and I picked it up and dusted it back off and looked at it. The truth of the matter is the important thing is to point forward and to keep people pointed forward. This is a funny transition, because - how do I say this the right way? Bill started the company, but for the people in the company it’s as much my company almost as it is Bill’s, in a sense. So, it’s not like we’re passing it to let me call it a second generation. I feel relatively first generation, let me say it that way, to our employees. I’m not Bill, but I have some of that first generation fairy dust sprinkled over me, so to speak.

FT: Microsoft’s share price hasn’t done much for years. Why not?
MR BALLMER: Well, I think in general we’re not that inconsistent with most large cap stocks. [Also,] for all companies there is a period in which your stock is priced very high on the expectation of growth, and then you go through a period where you’re in “show me,” you’re going to do that growth. This is what the market is supposed to do, it’s supposed to bid your price up in advance of profit, if it thinks you’re going to have them, and then it holds on for a while until you can surprise the market with yet another surge beyond expectations.

So, I think we have grown into what people expected of us in the late ’90s, and now people are trying to decide what do they expect of us, and that gets down to essentially three or four key questions. Are we going to stay strong in the businesses where we have established ourselves? Are we going to be able to move into big, new businesses like online, TV, and phone? Are we going to continue to drive [the] enterprise business, because I think that’s a sleeper for many people, it’s been the thing that’s really propelled a lot of our growth over the last several years, and are we going to be able to get emerging markets really figured out with the high software piracy there?

You know, our share price was sort of on a different trajectory. Then we announced our bid for Yahoo, and that kind of changed the trajectory a little bit. As investors try to think, how are they going to succeed in online, what kind of investment is going to be required, how much value can they create, I feel very good about our prospects. Certainly I feel very good about our results. We’ve out-performed most of our industry in terms of profit growth over the last five years.

FT: The Yahoo bid was taken partly as a tacit admission that you needed to do something fairly radical. Was that a fair response?
MR BALLMER: No, it’s inaccurate. It may be fair; I can’t comment as to fair. In a sense online is our best deal, isn’t it? We’re small; the other guys are big. There’s a market out there. We have only one way to go, and it’s up, baby, up, up, up, up, up!

We thought we could accelerate the upside in a way that was value-creating. At the end of the day, Yahoo was not an online strategy. It was a way for us to accelerate our own online strategy. They didn’t want to sell. We were relatively disciplined about the financials You know, it’s funny, because we’re founders, I think [shareholders] wonder whether we really care about creating shareholder value, and yet I think we were far more disciplined than 95 out of 100 companies would be.

FT: What lessons are there from Microsoft’s late move into search?
MR BALLMER: I think we have to keep agile. I do fault us for the speed with which we dove into search, primarily because we didn’t see the business model. And I give Google credit for innovating in the business model around search. They did a nice job on that, and that’s why they won.

I think one of the mistakes we made, and I think we’ve said this before, is having a five-year gap between Windows releases did calcify our ability to react to anything, because there was a five-year window basically where a big part of our R&D resources were fairly locked in. It doesn’t mean everything should be a six-month cycle, I don’t believe in that, but we’ve got to have more flexibility in our R&D commitments than that.

FT: How do you deal with search now?
MR BALLMER: I think we have three things we’ve got to do. There are some things that we just have to, as we say, ante up to be in the game: relevance, cap-ex, responsiveness. There are areas in which we’re going to differentiate and make Google play catch-up. And then there are areas in which we’re trying to change the rules. I think Google is going to have to decide whether they want to come with us. If this Live Cashback thing is successful, they’re going to have to decide if they want to play the game or not. [Note: Microsoft’s Live Cashback service, announced last month, pays a rebate to internet users if they make a purchase after finding an online merchant through a Microsoft’s search engine.]

FT: Is Live Cashback a way to buy market share?
MR BALLMER: No. Well, I don’t know. If somebody else comes out with a product and says my product is better and cheaper, is that buying market share because they made the thing cheaper? That’s all we’ve really done here.

Search looks free, but, of course, search isn’t really free. It’s not free to the advertisers. So, what we’ve said is we’re going to change the way the money gets divided. In today’s world the search provider basically keeps everything, and we’ve said, look, we’re going to share that money differently, some to the advertiser, some to the user, and some to us. Is that buying market share? I think that’s called reinventing the business model in a way that makes the business more competitive, and we’ll see if it works or if it doesn’t.

I’ve got to tell you, in every - other than the battle with Open Source, every other competitor, I love being able to come into a room and saying we’re better and we’re cheaper. We’re going to try to say we’re better and we’re cheaper basically. I don’t think this is sort of the end of the story by any stretch of the imagination, but I think it tells you we’re going to do things a little differently.

We’re going to have to climb up one [market] share point at a time, one innovation at a time. I don’t think this is something that changes, flips overnight.

FT: Why hasn’t that approach worked so far? You’ve been at it for some time.
MR BALLMER: No, no, we’ve been building up the basic ante primarily. We had no search engine and we had no paid search engine. We had to build. Then we had to get one round of feedback on where we weren’t up to snuff. Then we had to start tactical differentiation. Now we’re starting some business model differentiation. We’ve got some UI innovation.

You know, the world isn’t very smart about technology businesses in the sense of thinking they move super quickly. Things do move quickly, there’s no question, but generally at the end of the day you have to be fairly patient and persistent with innovation in order for it to beak through.

FT: A lot of people are now saying Yahoo was Web 1.0 and would have been difficult to do, and you should instead be looking at the next thing - Facebook or social networking, whatever comes after that.
MR BALLMER: I think people don’t understand what they’re talking about. At the end of the day, this is about the ad platform. This is not about just any one of the applications. The most important application for the foreseeable future is search. It’s where you start things. It’s where you express intent. It is important.

I don’t think we can say, okay, well, we’re going to be in the ad platform business, and we’re going to do it just on the strength of non-search based assets. We have to be in the ad business, and we’ve got to have a good chunk. We don’t have to dominate, but we’d better have a darn good chunk of the search market over time, and we’re working away at it.

FT: How long are you going to do this job for?
MR BALLMER: I’ve told everybody I think I’d like to do it until my youngest goes to college, which would be nine years from now. I mean, it might wind up less, the board might not want me here, but that’s kind of my life planning horizon.

FT: How do you want to be judged? What goals have you set yourself for that period?
MR BALLMER: I set two kinds of goals: innovation goals, and what I’ll call relative goals.

The relative goals: I’d like to see our company increase its share of profit from all companies who have software as a core capability. I’d like to see us increase our share of the pool. What we are is we’re a software innovation machine. We can turn that machine and apply it in different places. We’re not just a desktop company or an enterprise company; we’re an online company, we’re a software embedded in devices company. And we should be able to outgrow the rest of them.

We’re not going to do that without the right innovation. [That] rolls up into five or six big themes. How do you redefine the way people interact with technology, big screen, little screen, medium-sized screen? How do you redefine the user experience and redefine the definition of how these devices relate to each other? We’ve got some big ideas in that area. I’d like to get those accomplished in the next nine years.

All of the world’s media advertising communications is moving online. I would love to be the company that does the best job at helping people put information online, create new forms of information and communication for that online world, and then that helps people - helps businesses monetise them and consumers consume them.

[We’re] going to move to a world in which more and more of computing is done in the cloud as opposed to corporate datacentres We’ve got a big initiative about transforming essentially enterprise computing and taking costs and complexity out of that.

Last but not least, the ability to let people not only get at information but then to analyse it and use it, we’re already talking about this some in the context of consumer search. We say it’s not really about search; it’s about the task. How do I find and act, find and analyse, find and get insight. I think we haven’t even scratched the surface of innovation in that area.

FT: What sets Microsoft apart as it pursues all these things?
MR BALLMER: I think we’re the only company in our industry that’s got any track record of persistence. Some companies get it right once. We’ve gotten it right twice, because we stay after it.

FT: Is that he core attribute of this company, persistence?
MR BALLMER: I think our long term - I’d call it our long term approach, which is a combination of taking on bold challenges, being patient, being persistent, being relentless. There’s an accountability and in some senses you’ve got to be relentlessly accountable and you also have to be willing to stick with things. We don’t pull back; it’s not what we do.

Sometimes we get shareholders who will question us on that, but I think it’s our great strength. It’s what built Windows, it’s what build Office, it’s what built our enterprise business, and what’s going to let us build the search business. It’s what letting us build a TV business.

FT: Have you learned anything from competing with Google, for instance their speed?
MR BALLMER: I haven’t seen speed out of Google really. I mean, come on. They have one product. It’s been the same for five years - and they have Gmail now, but they have one product that makes all their money, and it hasn’t changed in five years.

I mean, they have a gestalt, but gestalt is gestalt. Let’s talk about the reality. The reality is one product makes 98 percent of all of their money, search. Oh, they have two products, AdWords and AdSense. They have two products, both search-based, that make all of their money, and it hasn’t changed a lot in five years. I’m not giving them a hard time, but we’ve got to learn - if you say, what have you learned, we try to learn from people’s successes, not from people’s gestalt. The gestalt is yet to be proven.

Jerry Yang's Father's Day Letter To Steve Ballmer

Dear Steve,

Are you kidding me? There is no way we're selling out to the Evil Empire. You guys couldn't find a clue if you had a better search engine:

- $44.6 billion? How am I supposed to buy "Star Trek" collectibles with that?
- All those antitrust hearings would seriously cut into my Wii play time.
- Yahoo! freakin'! rules! Does your company have an exclamation point in its name? I didn't think so.

Go to hell (and have a Yahoolarious day),

Jerry Yang
Chief Yahoo!



Source: NY Post

NY Times Father's Day Gift To Jerry Yang: Its's No Longer Your Baby

To: Jerry Yang
From: Joe Nocera
Re: Shafting Yahoo’s Shareholders

Dear Jerry,

Congratulations — you pulled it off. You got Microsoft to walk away from your beloved Yahoo for good. The final word went out on Thursday...

...announcing a Google deal just a few hours after you and Microsoft revealed that your talks had officially ended. According to your press release, Yahoo will soon begin running ads sold by your archrival...

...you’ve chosen to become a pawn of the most dominant company on the Internet. How exactly is that going to lead to a brighter future for Yahoo?

...Here’s the problem, Jerry. It’s not your baby. It hasn’t been since 1996, when Yahoo went public.

...It sure didn’t look as though you ever took those negotiations seriously. You rarely brought any of your investment bankers... and sometimes the only person you brought along was Mr. Filo — who isn’t even on Yahoo’s board!

...Yang engineered an ingenious defense creating huge incentives for a massive employee walkout in the aftermath of a change of control... The plan gives each of Yahoo’s 14,000 full-time employees the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover, by claiming a ‘substantial adverse alteration’ in job duties or responsibilities.”

... it actually encourages Yahoo employees to quit after a takeover, by guaranteeing them a financial windfall that Microsoft would have to pay. And since it cannot be upended even if the board is ousted, or the company is taken over, it also discourages anyone from trying to take over Yahoo.

Jerry, you’re a billionaire because people all over the world bought your stock, and trusted you to do right by them. That’s the compact you make when you take a company public: you get to be really rich, but in return, you have an obligation to do everything you can to ensure that shareholders get a healthy return on their investment. It doesn’t matter that you would like Yahoo to remain independent, or that you can’t stand Microsoft. Your feelings aren’t supposed to get in the way of your fiduciary duty.

A takeover by Microsoft was your last, best hope of rewarding your long-suffering shareholders. Now that opportunity is gone. It says here Mr. Icahn is not going to go as gently into the night as Mr. Ballmer did — and if I were a betting man, I would be taking odds that your days as Yahoo’s C.E.O. are numbered.

It’ll be better for everyone to have someone in that role who understands who he’s supposed to be working for. Wouldn’t you agree?

For entire NYT Post.

Microsoft Bans "Gay" And Explains

Richard Gaywood was surprised to learn that he was banned from the Xbox Live user group.

He had created a gametag in the user group under his legal name Gaywood.
Microsoft said that his legal name which contains the word "gay" was in violation of Microsoft XBox Live's terms of use.

"We want the Xbox LIVE community to have the freedom to express themselves, but we also have a responsibility to create an inclusive, safe environment. While it may be clear to some that Gaywood is a legitimate surname, it may not be obvious to other Xbox LIVE members. In this case, a complaint was filed by a member of the community, requiring the Xbox LIVE team to examine the gamertag within the context of the Xbox LIVE Terms of Use. Based on the these guidelines, it was necessary for the gamertag to change", said Microsoft's Stephen Toulouse.


Not too long ago "TheGAYERGamer" received a ban from Microsoft. Toulouse stated that "Gamertags are visible to everyone and it would be hard for me to defend to a parent of a young child who saw it that the name did not contain content of a sexual nature."

Microsoft said that Mr. Gaywood's gamertag will not be reinstated.

Search Report: Google Up, Yahoo & MSN Down

Google accounted for 68.29 percent of all U.S. searches in the four weeks ending May 31, 2008, Hitwise announced today. Yahoo! Search, MSN Search and Ask.com each received 19.95, 5.89 and 4.23 percent respectively. The remaining 41 search engines in the Hitwise Search Engine Analysis Tool accounted for 1.63 percent of U.S. searches.

Percentage of U.S. Searches Among Leading Search Engine Providers

Domain	May-08	Apr-08	May-07
www.google.com	68.29%	67.90%	65.13%
search.yahoo.com	19.95%	20.28%	20.89%
search.msn.com	5.89% *	6.26% *	7.61% *
www.ask.com	4.23%	4.17%	3.92%

Note: Data is based on four week rolling periods (ending 5/31/ 2007, 4/26/08, 5/26/2007 from the Hitwise sample of 10 million U.S. Internet users. * - includes executed searches on Live.com and MSN Search but does not include searches on Club.Live.com.

In the U.K. market, Google search properties (Google.co.uk and Google.com) accounted for 87 percent of all UK searches in May 2008 representing a 12 percent increase compared to May 2007. Yahoo! search properties accounted for 4.09 percent of UK searches in May 2008, a 2 percent increase compared to April 2008. MSN search properties accounted for 3.72 percent and Ask search properties accounted for 3.07 percent of searches. MSN increased two percent compared to April 2008 and Ask increased 6 percent.

Percentage of U.K. Searches Among Leading Search Engine Providers

Domain	May-08	Apr.-08	May-07
Google Properties	87.30%	87.69%	78.28%
Yahoo! Properties	4.09%	4.01%	8.58%
Microsoft Properties	3.72%	3.65%	5.46%
Ask Properties	3.07%	2.89%	4.96%

Note: Data is based on UK Internet usage over the four week rolling periods (ending 5/31/ 2007, 4/26/08, 5/26/2007) from the Hitwise sample of 8.4 million UK Internet users. Note that the percentages for the search properties include the .uk and .com domains.

Google an Increasing Source of Traffic to Key U.S. Industries
Search engines continue to be the primary way Internet users navigate to key industry categories. Comparing May 2008 to May 2007, the Travel, News and Media, Entertainment, Business and Finance, Sports, Online Video and Social Networking categories showed double digit increases in their share of traffic coming directly from search engines.

U.S. Category Upstream Traffic from Search Engines and Google - May 2008

Category	Percent of Category Traffic from Search Engines, May-08	Percentage Change in Share of Traffic From, Search Engines, May-08 - May-07	Percent of Category Traffic from Google, May-08	Percent Change in Share of Traffic From Google, May-08 - May-07
Health and Medical	45.76%	3%	30.86%	5%
Travel	34.81%	11%	24.26%	21%
Shopping and Classifieds	25.48%	2%	16.84%	8%
News and Media	21.70%	7%	14.53%	10%
Entertainment	24.33%	17%	15.76%	22%
Business and Finance	18.15%	14%	11.73%	22%
Sports	13.09%	17%	8.81%	24%
Online Video*	29.94%	37%	20.78%	52%
Social Networking*	16.50%	18%	9.98%	21%

All figures are based on U.S. data from the Hitwise sample of 10 million Internet users.
* denotes custom category
Source: Hitwise

Microsoft Shuts Down Craigslist Competitor

You might have not known about it but apparently Microsoft does have a Craigslist like competitor. The site is closing down less than a year after launch. This past month several major sites that launched me too products have decided to abandon their efforts, focus on their core business and leverage the expertise of the professionals in their respective fields. Monster closed its social networking site Tickle which it acquired for $94 million, Verizon will close its social networking site on June 16, 2008 and move to a Facebook page. Below is the pop-up message that greets visitors to the Microsoft site.

Windows Live Expo will discontinue service on 31 July 2008. In preparation,
the following features are no longer available:

* Create a new account.
* Post a new listing.
* Extend a listing.
* Upgrade a listing to a premium listing.

All current listings will remain on expo.live.com until they expire.

Microsoft: HP's Searchbar Search is Over

Microsoft has entered into a significant new deal with HP to have the Microsoft Search Bar distributed as the default on all new HP consumer computers, starting in 2009. Here's the official press release from Microsoft.

The searchbar stakes are potentially very, very high. Most users don't mess with default settings, which means that the default search will be used for a *lot* of searching at Microsoft Live. Microsoft's overwhelming share of the browser market appeared to give them the advantage in this space early on. However Google's search results superiority combined with legal actions against what was a virtually monopoly by Microsoft's on the IE browser. These twin forces kept Microsoft in virtual search darkness, a very distant third to Google and Yahoo in search despite the fact that Microsoft controls the browser which still maintains over 80% of the browser market with Firefox (with Google as the default search) in firm second place.

New Firefox 3 Browser Offers More Features

Mozilla's latest version of its popular Firefox browser, Firefox 3 (Release Candidate), is available for testing purposes only. So, in the ongoing browser wars between Microsoft's Internet Explorer (version 8 beta available), Apple's Safari browser, the Opera browser, and Mozilla's Firefox, who is winning? The Netscape Navigator browser died a slow death and eventually dropped out of the race leaving the others to duke it out. So, who is winning? No surprise, based on Q1 2008 data from Net Applications, IE leads the pack with a 75.06% global usage market share followed by 17.35% for Firefox, Safari at 5.78%, and Opera at 0.67%.

With Firefox 3, what exactly is new? What can we look forward to in the next generation web browser. Well, their site lists a laundry list of goodies but here are the magic 3 improvements.

1. More Ease of Use

• Full page zoom: with FF3, you will be able to zoom in and out of entire pages, scaling the layout, text and images, or only the text size. And your settings will be saved whenever you return to the site.

• Save what you were doing: Firefox will prompt users to save tabs on exit. Love that!
  

• Text selection: multiple text selections, double-click drag selects in "word-by-word" mode, and triple-clicking selects a paragraph.

• Find toolbar: the Find toolbar now opens with the current selection.

2. More Personalization

• Tags: ability to tag your bookmarks to sort them by topic.

• Location bar & auto-complete: type in all or part of the title, tag or address of a page to see a list of matches from your history and bookmarks.

3. More Security

• One-click site info: click the site favicon in the location bar to see who owns the site and to check if your connection is protected from eavesdropping.

• Malware Protection: malware protection warns you if navigate to a site known to install viruses, spyware, trojans or other malware.

• New Web Forgery Protection page: the content of pages suspected as web forgeries is no longer shown.

• New SSL error pages: clearer and stricter error pages are used when Firefox encounters an invalid SSL certificate.

IE8 May Cause Your Website To Display Incorrectly

The beta versions of Microsoft's Internet Explorer 8 are here and although there is no firm release date as of yet for the final version of the latest IE browser, are you and your sites ready for it? IE 8 is being created to ensure adherence to web standards for interoperability. It is being touted as including a more standards-compatible layout engine by default which allows developers to build a single standards compatible website for multiple browsers. The problem and irony is that web sites created for Internet Explorer 7 and below, may not render as they should in IE 8. Users may experience one of the following issues:

• Misaligned web page layout
• Overlapping text or images
• JavaScript functionality issues and errors

Yikes. The issue is that IE 8 uses its new 'standards mode' by default which is different from the IE 7 standards mode. However, if your site exhibits any of the above pesky symptoms, clicking on the 'Emulate IE 7' button will allow users to revert to viewing your site as it should appear using the IE 7 compatible layout engine to retain compatibility with existing sites. The other Microsoft prescribed remedy is to add a site or page-level meta tag to tell IE8 to display the page for IE7.

Bill Gates Reneges On Donation To Charles

Bill Gates has reneged on his promise to donate £1 million to Charles's charity, the Prince's Trust. Instead Mr. Gates donated £250,000 worth of software which Microsoft sources claim to be worth £5 million.

Tea Will Not Be Served: Either way Charles' mummy Queen Elizabeth was not very happy with Mr. Gates. Mr. Gates had agreed in principle to give the money to the organization's Business Program, which helps young people start their own companies. But negotiations between Microsoft and the Prince's Trust broke down and the offer was abruptly withdrawn despite the software company being one of the charity's patrons.

Insiders say Mr. Gates, intervened personally to block the donation after a trip to Britain in January. Microsoft insiders say the program was not "tightly focused enough around technology" to benefit its recipients and the software donation would help with that.

Microsoft spokesman: "Earlier this year, we had been in discussion about extending our involvement with the Prince's Trust, including a potential financial commitment. After a great deal of consideration, we decided not to pursue that particular element of our co-operation. The spokesman denied that Bill Gates had any hand in the decision, stressing that it was made at a "local level".

The Prince's Trust: "The Prince's Trust and Microsoft have been discussing a partnership to support young people through our program. While we are delighted to have received a gift of Microsoft software, we were disappointed that Microsoft decided not to pursue other aspects of the partnership".

Microhoo - Here It Goes Again - OK Go

I think this speaks for itself!

Microsoft Email #2 Leaked: Online Strategy

For those of you trying to figure out where Microsoft is headed or trying to head here is another memo. This time from Satya Nadella, VP Search for Microsoft. On Monday we published Kevin Johnson's email to employees on Microsoft's Key Initiatives.

satyamemo - Upload a doc

Read this doc on Scribd: satyamemo

Steve Ballmer Egged. Is Microsoft Still Evil?

Microsoft CEO, Steve Ballmer, was egged by a student during a speech at the Hungarian University in Budapest. The student threw eggs at Mr. Ballmer and accused Microsoft of stealing 45 Billion in Hungarian taxpayer money.

Many African countries have said that the aid Microsoft provides them in the form of free software, benefits Microsoft many times more in the end. Microsoft donates free software to governments and universities and hence gets them hooked on it. Shortly after the donation, the software requires upgrades, if not it becomes unusable. By then the governments and universities have become highly dependent on the software and have no choice but to fork out millions of dollars for upgrades. These cash strapped countries have many requirements competing for their money such as buying food, medicines, and other necessities for their populations. Hence, Microsoft came to be known as the evil empire.

The Government of India, was faced with a similar situation with Microsoft and decided to launch the Linux Initiative, which had a significant negative impact on Microsoft's business. In fact, the State of Tamil Nadu has rolled out Linux and Open Source Software in all the government departments.

Is Microsoft still evil? Will the rise of web applications give rise to a new axis of evil?

Microsoft Email Leaked: Focus Search, Social Media, Display Ads & User Experience

From: Kevin Johnson
Sent: Sunday, May 18, 2008 1:30 PM
To: Platforms & Services Division; APSP FTE - Adv & Pub Solutions Platform; Employees.all.corp.adf@main.corp; Employees.all.adf@main.corp
Subject: Online Services Strategy Update

We have been executing against the core strategy I first presented at our Financial Analyst Meeting in July 2007 to go after the growing opportunity in online services and advertising. Four pillars have formed the basis of our strategy:

1. Consolidate ad platform and win in display
2. Innovate and disrupt in search
3. Deliver end-to-end user experiences across PC, phone, and web
4. Reinvent portal and social media experiences

We have many options that support acceleration of our strategy. As announced earlier today, we are also considering new alternatives for a transaction with Yahoo! which do not involve a full acquisition. At this time, we have not made a new bid to acquire all of Yahoo!, but we reserve the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo!, shareholders of Yahoo! or Microsoft, or with other third parties.

Regardless of the outcome of any new discussions, it is important that we continue to move forward to strengthen our online services business. The fact is that we are not where we want to be in this business yet and we've been in this position longer than we'd all like. To that end, we will be accelerating elements of our core strategy, and breaking ground in new areas.

On Tuesday, Brian McAndrews is hosting advance08, our annual advertising conference here in Redmond. Over 400 leaders from across the media, technology and advertising landscape will be here for two days to engage in dialogue on industry trends and opportunities. These leaders are some of our closest partners in the digital transformation of the advertising industry, and they recognize the increasingly important role Microsoft plays in this transformation.

We are very excited to have these customers and partners on campus.

Brian's keynote will highlight our unique position in the advertising industry. It's amazing to see how far we've come with the aQuantive acquisition in differentiating our advertising platform. This foundation is paying off, with Q3 advertising revenue growth of nearly 40%, a rate that has accelerated over the past two quarters while growth rates at Google, Yahoo and AOL have slowed.

On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model. You'll hear more about our plans Wednesday.

advance08 will underscore our commitment to search and online advertising, and you'll continue to see announcements demonstrating our progress in this space. Earlier this week, I spoke to leaders across our online services business about our core strategy, the importance of acceleration and a set of actions we are taking, including:

1. Innovate and disrupt in search - We will disclose some elements of our plans with this week's release of search and sharpen our focus on user experience and business model innovation. The work we have done over the last 4 years on search has established a solid foundation to build upon.
2. Win targeted distribution - With this release of search, we are now ready to throttle up broader distribution initiatives.
3. Reinvent portal and deliver new experiences across PC, phone and web - We are building our new releases of Windows 7, Windows Live wave 3, Windows Mobile 7, Internet Explorer 8, Search and MSN with an eye towards optimizing and unifying experiences and scenarios.
4. Fix our online branding - Our brands are fragmented and confusing today, and we recognize a need to clarify and align our online branding. We are now driving forward to address this opportunity.
5. Win in display advertising - We have an advantage in tools, agency assets/relationships and a team laser-focused on capturing the display ad platform opportunity. As we build from a position of strength, we will increase engineering resources to drive even more innovation.
6. Build on our strengths in Europe - As measured by comScore in March, our online business in Europe is doing well. We have over 3 times the page view volume and nearly 7 times the minutes of usage compared to Yahoo!, and 68% reach to internet users throughout Europe. We will double down on our investments in Europe and expand on this strong position.
7. Expand strategic partnerships - In addition to our organic innovation agenda, we will expand strategic partnerships that increase inventory on our display ad platform, enable new paradigms in search and accelerate growth in key geographies.
8. Pursue small, targeted acquisitions - Looking forward, we will focus on small, targeted acquisitions that support our work in search, complement our value in the ad platform and help us grow scale in key geographies. Recent acquisitions including Rapt and YaData are examples of these types of acquisitions.

The PSD leadership team is actively working on the FY09 budget, including resources and investments to support the actions above. Additional elements of our work will be revealed in the coming weeks, leading to our Financial Analyst Meeting in July where I will share more details on our strategy and business/financial outlook.

As we move forward, I want to remind everyone that we are well positioned to compete. We have some of the industry's best assets on our side: technical and business talent, global scale, a culture of self-criticism and tenaciousness, a healthy balance sheet and an unparalleled product portfolio. It's time for us to seize the opportunity.

Thanks again for your continued leadership and focus on our business. If you have any feedback or thoughts, please feel free to send me mail.

Regards,

Kevin Johnson

Microsoft to Yahoo With A Little Bit Pregnant Plan

After Yahoo spurned their initial offer Microsoft said they were no longer in the game to aquire Yahoo. However corporate raider Carl Icahn entered the fray last week with a proposal that would force Yahoo into Microsoft's arms, netting Icahn a huge payday if Microsoft ponied up the $33+ they were clearly willing to pay before.

As if this deal was not already complicated enough, Microsoft is now proposing to Yahoo some form of collaboration on search, presumably a deal where Microsoft and Yahoo search teams would team up against Google.

We'll have to wait for more to critique the plan but at first glance I'd suggest this is a weaker plan than a full aquisition as it will wind up connecting two challenged search divisions at a time when clear, bold, innovative leadership is needed. I can't imagine Jerry Yang working under Microsoft guidance and getting much done, and conversely I can't see him successfully directing Microsoft folks towards the search success that has been eluding Yahoo for so long.

Microsoft Press Release

Disclosure: I'm still long on YHOO

How To Beat Google According To Mark Cuban

Blog Maverick - Mark Cuban has added his voice to the chorus on beating Google. Cuban presents a plausible argument. He argues that in essence, its no different that any other content aggregation play. Its paying for content. Here it is:

Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?

Better search? Too subjective. Better monetization? After the fact. Better User Interface? Will we know it when we see it? A new and different search? Semantic? Human powered? We won't know till we know.

But what about the Google Index, all the websites that are indexed by Google? What is it worth to be in the Google Index? What would you, as a website owner require in order to remove your site from the Google Index and no longer be available when someone does a google search?

It should just be a matter of dollars and cents and sense, shouldn't it?

How many websites would have to recuse themselves from the Google Index before Google Search was negatively impacted?

Mahalo.com thinks it needs to support the 25K most common search terms in order to be successful. What would happen if MicroSoft or Yahoo or a MicroHoo went to the 5 top results for the top 25K searches and paid them to leave the Google Index?

A theoretical maximum of 125K sites, but with overlap, probably closer to 100K or less, times how much per site on average?

The math starts to get interesting. At $1,000 per site average times 100K sites, thats only $1 Billion Dollars. The distribution would obviously favor the larger sites, so of that billion dollars, would the top 1K sites take 500K each and the remaining 99K split the rest?

Given the stakes, why stop at $1 Billion Dollars? Would the top 1k most visited sites take a cool $1mm each, plus a committment from MicroSoft or Yahoo to drive traffic through their search engines to more than make up for the lost Google Traffic. After all, once consumers realized that Google no longer had valid search results for the top 25K searchs, that traffic would most likely go to MicroSoft and Yahoo.

And why we are at it, why not require that these 100k sites switch from Googles Publisher Network to Yahoo's or MicroSofts? It would start to earn back the $1 Billion paid out very quickly.

On top of that, in order to grease the skids even further, why not issue advertising credits to the sites that switched off Google? Its soft dollars, that would sweeten the pot and drive more traffic.

IN essence, its no different that any other content aggregation play. Its paying for content. But, it would take some big ones to go for it and see if it worked. However, without question, every search engine has some number of core sites, that when removed from its index, destabilizes the value of its search.

The question is how many? What would it cost to get that number of sites to turn Google off and stay off, and would the traffic created as users switch from Google more than compensate for the cost?

Or would Google recognize the risk and jump in and offer more to websites to stay?

Sure would be interesting to find out.

Can Icahn Yahoo?

Carl Icahn has notified the Yahoo board that he'll be leading a takeover of the company. The letter below was his notification to Yahoo, and included his intention to buy 2.5 billion in stock. Presumably Icahn has already confirmed that Microsoft is still interested in a takeover, and given Steve Ballmer's legendary temperament I'm guessing that he is giddy at the prospect of ultimately winning the battle he walked away from a few weeks ago.

I think Icahns prospects of losing this are small, and would guess he's in for one of the biggest paydays in corporate history. While Yahoo's board obsessed over the Microsoft takeover many shareholders simply wanted the best return on their Yahoo investment. Given that no dramatic new strategic proposals have come from Yahoo in (over a decade?), few shareholders are going to be willing to hold their breath while the current board pretends to be making major changes at the company that would justify a stock price in the ballpark of what Microsoft has already offered.

The fat lady is singing, and her name is .... Carl Icahn.

------------------------------------------
Carl C. Icahn
ICAHN CAPITAL LP
767 Fifth Avenue, 47th Floor
New York, NY 10153
May 15, 2008

Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Mr. Bostock:

It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.

During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover.

While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain "strategic alternatives". I therefore hope and trust that if there is any question that these "strategic alternatives" might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.

I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.

Sincerely yours,

CARL C. ICAHN
----------------------------

Disclosure: Long on YHOO

Icahn Eyes Yahoo for Possible Takeover

Billionaire takeover strategist Carl Icahn is looking at a possible play to force Yahoo back to the table with Microsoft to sell the company at a big profit. The news today sent Yahoo up about 1.30 and YHOO is still rising in after market trading.

Given that the prevailing stock price of Yahoo is well below Microsoft's top offer of $33 per share, this play has only one key challenge - making sure you can get Microsoft back to the table. Frankly I think that is not much of a hurdle to overcome as I think Microsoft Steve Ballmer's decision to drop the bid was 1) Mostly strategic to force the issue and 2) Will be quicly overcome if Icahn can seat a more sympathetic board of directors.

I'm guessing that Ballmer will have two basic requirements to return to the Yahoo table:
No Google deals and no more Jerry Yang. Although it would be sad to see a founder of Yang's vision leave the company one does not need to feel too sorry for him. A Microsoft merger would value his stock close to 100% higher than the lows of a few months back, netting Yang in the neighborhood of an extra half billion over that low price.

Of course Yang has seen Yahoo trading at over $100 and I think part of his malaise over the deal is a longing for the good old pre-Google days where Yahoo was the high flyer in terms of value and buzz. Sorry Jerry, but despite Yahoo's suberb ongoing work in many aspects of the online experience, those days ... are ... gone.

Most analysts do not feel Yahoo can sustain even the current price levels without the "threat" of a takeover looming, which is propping up a share price that will likely drop to $20 or below if Yahoo had no serious takeover suitors. In fact YHOO was trading at about $18 per share a few months ago just before Microsoft bid which valued the internet empire at about 60% more than the market. Yet Yahoo argued this was not enough and the board, especially in the form of CEO Jerry Yang, went to great lengths to prevent the Microsoft Merger.

Icahn is no stranger to this takeover strategy and the graph above shows how successful it has been for him.

Image Credit: Fortune Magazine
Disclosure: Long on Yahoo

Facebook Borrowing to Scale Up Servers: $100,000,000. Facebook Stock: Priceless?

Facebook has announced that it will borrow $100 million to purchase new servers. This report suggests they are scaling up from 10,000 servers to about 60,000. Assuming Facebook Connect is widely adopted (and it probably will be) it does make sense that the server loads may go up dramatically.

So why did they borrow that money rather than just sell more stock? Silicon Alley Insider suggests, I think correctly, that it is because nobody is foolish enough to value Facebook at the whopping $15 billion that earlier deals were *rumored* to have been based upon. In fact Henry Blodget suggests that the Hong Kong deal did *not* value the company at 15 billion. I've noted before that Microsoft was probably not all that concerned about the monster theoretical valuation they gave to Facebook with the $240,000,000 investment - rather they were after foothold and ongoing advertising and partnership agreements.

So, with Facebook poised to lose a lot of money in the coming months to years, what will be their ultimate future? Without some huge breakthrough in their pitiful social networking advertising yields, the answer may not be all that Facebook friendly.

Powerset Part Two

Web 2.0 Startup playmaker Mike Arrington was very skeptical of Powerset during the early phases, but he appears to have had a change of heart after attending a demo of the semantic search engine, scheduled to launch soon. Today in TechCrunch Arrington quotes his reaction to a demo last month and writes (with a few qualifications I'm not noting):

.. when I tested the service I had something very similar to the “Aha!” feeling that ran through me the first time I ever used Google. In short, it is an evolutionary, and possibly revolutionary, step forward in search...

This is the kind of praise that Powerset has had from several key valley players so it is not surprise that even before launch they are already on the sales block hoping for a huge play from Microsoft who is especially flush with cash after the withdrawl of Microsoft's offer to buy Yahoo. Although a pricetag of $100,000,000 has been bandied about Arrington is likely correct that this will be considerably too low for a company that - if Powerset lives up to all the hype and all the promise - could become worth more than Google or Microsoft as the next search giant.

Microsoft's New Plan Same As The Old Plan

Microsoft's proposed bid for Yahoo was its fastest way to gain the scale necessary to compete against Google for online advertising dollars. Even before pulling the Yahoo offer, the company he had begun laying the groundwork for a strategy to compete with Google in online advertising. Microsoft CEO Steve Ballmer is convinced that online advertising is crucial to its future. So much so that he sees online advertising making up as much as 25% of the company’s business within a few years. Google generates approximately US$ 22 billion versus Microsoft's US$ 3.3 billion from online advertising.

Consumers and businesses increasingly are switching from desktop software like Microsoft's to free online services that do the same things. "We are absolutely committed to be the leading player in that endeavor," Ballmer told employees at a recent gathering.

Google dominates the market, taking in 77% of the revenues from search advertising where as Microsoft has 5% of U.S. search revenue, according to search marketing firm Efficient Frontier.
Acquiring Yahoo would not have given Microsoft the revenue nor the search market share it is seeking for, as Yahoo's strength is in display advertising not search advertising.

Microsoft Seven Times Bigger Than Google In Display Ads
Microsoft's share of the display advertising market is already about 7 times larger than Google's. Although the display market is smaller than search, it's expected to grow faster over the next few years because of a surge in video ads. Market research firm IDC figures that by 2012 the display market will double, to $15.1 billion; revenue from search will reach $17.6 billion.

Microsoft makes money in the display business in two ways. It sells ads on its own popular web sites, such as MSN and Hotmail, and it acts as a broker by placing ads on other companies' web sites and then splitting the revenue with them much like Google's Adsense Program. Smaller web sites use Microsoft because they don't have a salesforce to call on advertisers and ad agencies. And even large players like media giant Viacom have found that letting Microsoft sell some of the space on sites like Comedy Central and MTV can lead to higher revenues. "They can achieve better monetization than we can on our own," says Viacom CEO Phillipe Dauman.

It's All About Display
Microsoft's new pitch is that, in display advertising, the company has the most sophisticated technology of any company. It can help advertisers precisely target display ads and assess the value of ads even when web surfers don't click on them. Microsoft is also making the case that search advertising, Google's gold mine, is overrated. Soon the company, it plans to introduce new ad technology that it says will demonstrate that to advertisers. "We're going to win with this strategy," said Keith Lorizio, Microsoft's advertising manager. More>

Image Source: Forbes

Andreessen to Become Facebook's 4th Board Member

Kara at Boomtown is reporting that web visionary Marc Andreessen, who brought us Netscape and Ning, is likely to become the 4th board member of Facebook.

This is particularly interesting because Ning is a major player in the Open Social Alliance spearheaded by Google, an alliance that includes Myspace but not Facebook. Is Facebook seeking to bridge that gap in the social networking space? Certainly Facebook's power plays in the executive and board areas suggest that the social juggernaut has even bigger plans.

With the Microsoft Yahoo merger on the skids, many have suggested that Facebook may be a key new aquisition target for Microsoft.

Yahoo Shares Drop as Microsoft Merger Melts

Yahoo shares opened this morning at $23.02, down $5.65 from yesterday's close. However Yahoo has bounced back a bit to just under $25 per share at 1pm, perhaps reflecting investor's optimism that a deal will still be struck with Microsoft after what some - including me - think was a case of MS CEO Ballmer calling Yahoo's high price bluff.

Jerry Yang wrote investors and the public today at the Yahoo Andecdotal blog in a post titled "OK, so now what? There he writes:

We’ll continue to execute on our plan — making your Internet experience as personal, relevant, open and social as possible, serving advertisers so well they insist on working with us, and opening up Yahoo! in a way that developers dream of. And, we’ll also continue to pursue strategic opportunities that position us for long-term success.

Jerry also appeared to be doing a bit of covering Yahoo's butt in what is likely to be a spate of shareholder lawsuits suggesting Yahoo should have sold the company at the price offered:

Frankly, there’s a lot of nonsense and misinformation in what’s being reported. Just so we are all clear, here’s what happened. The board took its mission very seriously. We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo! and was in the best interests of our stockholders.
No one is celebrating about the outcome of these past three months… and no one should.

But wait ... didn't somebody hear a champagne cork pop at Jerry's house? His statement does not really jive with the open letter from Steve Ballmer or the rumor mill where it has been strongly suggested that Yahoo was a lot more interested in killing this deal at all costs than compromising in any reasonable way.

Disclosure: I am (still!) long on YHOO

Microsoft and Yahoo

Both in the mainstream TV news and online there seems to be a lot more noise than signal about the Yahoo Microsoft merger situation. I still think that Microsoft plans to acquire Yahoo and that they will find a way to make it happen over the next few months.

This view seems to put me in the minority because many are saying the deal is "dead". That is technically true of course - Microsoft withdrew their offer yesterday - but Ballmer's letter made it very clear that he was still open to a sale, and I think a quick read between the lines suggests he is trying to set up Jerry Yang for a hard fall. Without help from Google it'll be tough for Yang to keep his post after spearheading the effort that will effectively revalue the stock from Microsoft's top offer of $33 to tomorrow's open which is likely to be in the low $20's.

Techcrunch is reporting that the valley rumor mill suggests Yahoo is trying to get a Google deal announced before tomorrow's opening to avoid a major Yahoo selloff, and given the very favorable view of Yahoo from top Googlers Page, Brin, and Schmidt and their mutual distate for all things Microsoft I think this deal is probably going to happen, though I also think it will not do much to immediately prop up Yahoo's stock price which is likely to go down $5-$8 at tomorrow's open and possibly even more if frustrated investors decide it's time to give up on the company.

Disclosure: Long on YHOO

Ballmer's Letter to Jerry Yang Withdrawing Microsoft's Offer

Following is the verbatim text of the letter from Microsoft's Steve Ballmer to Yahoo's Jerry Yang. The source of this letter is Microsoft.

May 3, 2008

Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week’s conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

• First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

• Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.

• In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.

• This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.

• It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

------------------------

Analysis:

As we noted in the previous post there is good reason to believe that Microsoft is still in this to win Yahoo. Ballmer even uses the word "remains the only alternative", suggesting that the offer is still informally on the table. Ballmer somewhat ominously says:

.... our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

The Yahoo board is likely to have significant concerns already about shareholder lawsuits if the stock tanks following Microsoft's withdrawl, and this statement seems designed to drive that board vs shareholder wedge even further.

Of great concern to Ballmer in the letter are Yahoo's negotiations with Google to have Google take over Yahoo advertising. Ballmer implies that Microsoft was very concerned about the ability to compete with Google using online advertising tools. Yahoo is now refining the adwords-like "Panama" but may diminish that project if Google starts handling Yahoo monetization of advertising. Ballmer also suggests that Yahoo negotiators were using this Google alliance as something of a "poison pill" to kill the deal.

So, has the fat lady sung yet? I think not, and we are in for more fun as the high stakes game for the control of the internet ... continues.

Disclosure: Long on YHOO

Microsoft Walks Away From Yahoo

Microsoft has walked away from the merger talks with Yahoo after the two companies failed to reach agreement on price per share. Microsoft had increased their original offer of $31 per share in cash and stock exchanges to $33 per share (I'm not clear if that $33 took into account Microsoft's lower price since the initial offer or did not factor that in). Most reports said that Yahoo eventually indicated they would sell for $37 per share.

My take on this is that this is a clever strategic move by Ballmer and Microsoft who I think still plan to acquire Yahoo. Yahoo's share price is likely to be hit fairly hard by this development effective at Monday's open, probably sending Yahoo down significantly though it would seem unlikely Yahoo will approach former lows.

The degree of the share price drop will depend on whether the market thinks Microsoft is out or just bluffing, but either way this is likely to create a lot of downward pressure on Yahoo's share price. Microsoft will likely start buying shares on the open market at these reduced prices.

In the next post we'll take a look at today's letter sent by Microsoft CEO Ballmer to Yahoo CEO Yang, which suggests it is lucky for Jerry that Steve didn't have any chairs handy.

CNET Reports
Disclosure: Long on YHOO

Enterprise Application Audit

If you are managing an enterprise application, especially one that has a significant online presence, it is a good idea to regularly review new applications and innovations that may solve current problems or lower your costs on existing solutions.

One example of a resource to bookmark is Google's Enterprise Application list where you'll find several partners who have deployed solutions for Google Apps. Several of these partners have very robust applications for communication, emailing, and data integration that take advantage of Google's powerful and free to very low cost programs.

Another bookmark for those considernig or working on Microsoft platforms is Microsoft's Patterns and Practices Website which offers examples of a variety of Enterprise solutions using MS systems and applications.

However perhaps the strongest way to audit your Enterprise is to simply take a few minutes to list each of the key challenges you are facing, articulate them carefully so you can form a very targeted query, and then simply take some time to search online. Ideally you'll find *people* who have solved this problem and get them to share their experiences if they have not already written about their solution, but you'll also hopefully run into new or revised applications that can help.

Google Docs: Fighting for the Enterprise, Winning the World?

One of Google's most brilliant strategies to conquer the online world hasn't made them more than a trivial amount of revenue and perhaps never will. But they'll be OK with that, because Google is slowly encroaching on Microsoft at a game that company has dominated for over a decade with the Microsoft Office Suite.

Google Docs are still a small part of both the home and enterprise software market but they appear to be slowly getting incorporated into home desktops and enterprise applications around the globe, and this poses a huge threat to the Microsoft Office dominance in that market.

Wordsmith Nick Carr has it right and as usual puts the point cleverly:

[Google] knows that, should traditional personal-productivity apps become
commonplace features of the cloud, supplied free or at a very low price, the
economic oxygen will slowly be sucked out of the Office business. That doesn't
necessarily mean that customers will abandon Microsoft's apps; it just means
that Microsoft won't be able to make much money from them anymore. Microsoft may eventually win the battle for online Office applications, but the victory is
likely to be a pyrrhic one.

Pyrrhic victories are hardly the stuff of which success is made, and Carr's point is excellent here. Google does not even have to win some of the battles they have been fighting to win the big war for massive online dominance and untold online riches.

Google's recent brilliancy along these lines was forcing the 700MHZ spectrum open without spending a dime on it. Google was involved in the big spectrum auction but probably had no interest in winning. Rather, Google just wanted to make sure the big winner (which happened to be Verizon), would be required to adopt certain rules that happened to give Google big advantages in the mobile space in terms of the ability to capitalize on that market. I'd agree with Google that they were good rules - but that's beside the immediate point here, which is that Google's has been extremely effective at exploiting resources - or gaining access to them - without spending nearly as much as their competitors.

Historically Microsoft did this kind of thing as part of their massive capitalization and ability to spend. Google appears to be pulling this off without much spending at all, giving their competitors even more Pyrrhic victories while Google hauls away the really big online treasure.

Microsoft Yahoo Merger: The Four Dollar Divide

The Wall Street Journal is following Microsoft and Yahoo closely and via Google news you can read part of the WSJ report here but for the full WSJ go to Google News and select the story from there.

Microsoft has indicated that they will raise their offer to $32 or even $33 to avoid a hostile takeover fight, and Yahoo appears to be willing to settle in the neighborhood of $37. With only four dollars per share standing between a huge black eye for Ballmer and a collapse in Yahoo's price how long can this go on?

Not long at all.

I'd suggest a decision will be made by next Monday, and both companies will settle in at very close to $34 per share. Microsoft now appears almost certain to win a proxy battle given Yahoo's share price weakness with no real prospects for a big upswing in YHOO's price. The Yahoo board still has some negotiating power in that a hostile battle is probably an undesirable prospect for all parties and they can force that to happen, but by this time everybody knows Yahoo would lose that fight.

The union will threaten Google's dominance and shake up the internet for years to come, though the merger will only be the beginning of a very complex melding of different corporate cultures and company vision.

Disclosure: Long on YHOO

Tibco Gets On The Microsoft Silverlight Bus

TIBCO (The Information Bus Company) which sells business process management and business integration software is reportedly verbally committing to use Microsoft's Silverlight technology. The company plans to use Silverlight for their product development to create rich internet applications (RIAs) in cases where AJAX might not meet their needs.

Silverlight is a cross-browser, cross-platform, and cross-device plug-in for creating RIAs on the .NET platform. In an interview with InfoWorld, Rourke McNamara, Director of Product Marketing for SOA at Tibco said that "Tibco likes Silverlight over alternatives, such as Adobe's Flash platform, because developers can leverage existing skill sets like the ability to develop in C#. Silverlight also presents a lightweight environment, and Microsoft and Tibco have many joint customers."

Windows XP SP3 Released

Microsoft has released Windows XP SP3 to the web in several languages including English.

ARS Technica reports

Concerns over the general overall quality of the Microsoft Vista Operating System have put Microsoft in a bind with respect to longer term support for the XP environment.

Many companies as well as individual users have no intention of upgrading to Vista in the near future. In fact some installations have actually reverted to XP from Vista, preferring what appears to be the superior stability and familiarity of the XP Operating System.

My personal experience has been that OS upgrades are generally more trouble than they are worth, and I'm happier when I wait rather than plunge in and face the incompatibility consequences of the upgrades. Although it's probably not a good path to profits, I'd prefer to see Microsoft focus on the *smaller picture* with respect to software and improve things incrementally with easy-to-install upgrades rather than bring out massive, potentially bloated, and often challenging brand new programs.

Microsoft and Yahoo: What Will Ballmer Do?

The "deadline" imposed by Microsoft on Yahoo expired yesterday, which makes it likely that Microsoft is either preparing to drop their bid or - and this appears a more likely scenario - preparing for a hostile takeover where they'll try to get a new slate of directors approved for Yahoo who would view the takeover favorably, leading to a probable merge this summer.

Yahoo's board meets today and although it would be interesting to be there I'm certainly not envious of the Yahoo board right now. If Microsoft drops their current offer Yahoo stock is likely to drop severely - perhaps even below the 52 week low into the high teens. Shareholders will be understandably upset if fighting Microsoft has led to nothing more than a 30%+ drop in share price. Some have suggested a Google advertising partnership may help matters but I'm skeptical that the broad market views Yahoo as favorably as Yahoo seems to think. If they did one would expect Microsoft's share price to be faring much better than it has while people await the takeover verdict. In fact most stock watchers are convinced that if Microsoft announces they are dropping the quest for Yahoo MSFT will see a significant jump in share price.

Larry at CNET has noted some interesting alternative scenarios to a Microsoft Yahoo merger, even including a CNET option.

I think my prediction is the same as it has been for some time: Microsoft will start the hostilities but will also let Yahoo know they can get about $34 per share if Yahoo does not put up a fight. Yahoo will (finally) give in to avoid a potential price meltdown, lawsuits, and a fight that is only going to misdirect energy while both companies watch Google scoop up the increasing online advertising revenues.

Disclosure: Long on YHOO

Feeling Lucky?

Over at CNET Steve Tobak is wondering how much of a role luck plays in business success. Tobak nots some big lucky breaks in business such as Bill Gates' landing the IBM OS contract that launched Microsoft after being second choice for the job, but he winds up concluding:

... in my experience, passion, intelligence, hard work, perseverance and timing play a bigger role in success than luck.

I'm in partial agreement but I don't think I'm as convinced as Steve that things we can control play a big role in business success. If they did simply cutting loose a bunch of hard working, smart folks on new projects would generally bring success, and this is rarely the case. In fact if we look at most of the most conspicuous tech success stories of the century they seem to be more a product of a small number of people finding new solutions to major problems, often stumbling into success.

Yahoo, Google, Microsoft, and Apple all started small - very, very small in fact - and I think all of them would have happily sold out for tiny fractions of their current values very early in their growth curves before the founders understood the significance and magnitude of their key technological innovations. Yet they did not sell out because in I think all these cases there were not serious buyers who were willing to pay much in the early stages. Neither the founders of these tech behemoths, nor the key players who could have bought them out realized the potential impacts of these companies. All these four, and hundreds of other smaller companies, have gone on to become global leaders and global brands.

I'm not suggesting they were just lucky, but I think serendipity may play a large role in success, and it is probably helpful to recognize that success may come as much from circumstances that you cannot control as from things you can.

Microsoft: Despite Record Earnings Stock Falls in After Hours Trading

Microsoft (MSFT) reported record earnings for the quarter but recent stock price increases appear to have anticipated a stronger report as the stock has fallen about 1.38 per share in after hours trading as of 4:34 pm EST.

Still, very favorable earnings reports are now in from Tech giants like Google, Yahoo, Apple, and Microsoft. Could all the talk of severe recession problems be overblown when applied to the tech sector?

Over at Yahoo Tech Aaron Task reports:

A funny thing is happening amid all the recession talk: Most big tech companies are reporting spectacular earnings and revenue growth, especially those with significant overseas business.

Disclosure: Long on YHOO

Microsoft's Live Mesh

The big buzz right now is for a new Microsoft online initiative called "Live Mesh" that seeks to synchronize most of your computing needs into a single online (MS Windows driven?) environment.

I'm still digesting how this will play in the real world, but clearly Microsoft wants to provide a single framework that will work across many devices and programs, and clearly this is a good idea. What is not clear however is whether Microsoft is the best steward for this type of environment. If, for example, Windows is a requirement for Microsoft Mesh then they have already excluded a large group from the Mesh environment.

Mary Jo Foley at ZDnet has some interesting preview notes about this new Microsoft platform / service which will officially debut soon at the Web 2.0 Expo going on right now in Silicon Valley.

More Microsoft Mesh news later as it comes in ...

Yahoo Tops Consensus at .11 Per Share

Yahoo (YHOO) reported earnings of about .11 per share after the market closed today, in line with the "whisper numbers" of this morning but handily topping analyst estimates of .09 per share.

Henry Blodget has some real time analysis as the market digests this news, which appears unlikely to have a significant impact on the Microsoft merger deal except perhaps to bump up Microsoft's acquisition offer by a few dollars per share.

As the news rolls in YHOO is only up about $0.10 in after hours trading, indicating that this "good news" may be seen more as "no news" by markets that will likely soon be clamoring for some closure to the Microsoft situation.

Disclosure: Long on YHOO

Yahoo Earnings Out Today

Despite some breathless pronouncements that Yahoo's earnings report will be a watershed moment in the company's long history, I would strongly suggest that Yahoo's earnings are unlikely to have much if any impact on the fate of the company - a fate that is very likely squarely in the hands of Microsoft.

Obviously if the Q1 earnings come in way above the modest analyst expectations it is possible that Yahoo will escape a Microsoft merger by "earning" in the eyes of the market a much higher valuation. However the most likely scenario has Yahoo coming in with earnings that are in line with or only modestly above analyst expectations. Given how hard Yahoo is now working to improve the company's prospects and fend off a Microsoft takeover even a modest improvement is unlikely to be viewed all that favorably by investors. A few dollar increase in the share price might up Microsoft's bid for Yahoo, but it is unlikely to change the game much.

Assuming today's after close earnings are pretty much in line with analyst expectations of about .09 per share you can expect Microsoft to proceed with a proxy fight to takeover Yahoo, and you can expect Microsoft to win this battle. Investors - apparently even some major investors on the Yahoo board - have tired of Yahoo's failure to capitalize on their many strengths to challenge Google's online dominance.

Barring spectacular YHOO Q1 earnings, the fat lady sings today, and she's singing a Microsoft tune.

Disclosure: Long on YHOO

Microsoft "Albany" Online Software Suite in Beta Release

Microsoft has released in beta a new software suite targeted at the consumer market and named "Albany". Product manager Bryson Gordon explains the product:

“Albany” is the codename for a new all-in-one subscription service
of essential software and services consumers told us were most important to
them. We’ve pulled together the productivity tools people need to organize
their lives, security to help keep their personal information safe and
online services that make it easy for them to keep in touch with friends and
family, and folded them all into a single service that also ensures the
user’s PC is running the latest security and productivity
software. Bryson goes on to note that the Albany package
will include Microsoft Office Home and other productivity and collaboration
software components.

Albany will be a subscription based service which makes me skeptical that Microsoft can compete with the increasingly robust free offerings from Google and others. Google has started to include powerful collaboration and productivity tools such as Google Spreadsheets where users can quickly create forms for data entry which can be used across the internet. Companies like Zoho also offer some remarkably powerful online tools for database creation, most at no charge. In an environment where free services are rapidly replacing subscription services, can Microsoft Albany make much of a mark?

Source: Microsoft Press Release

Microsoft Buys Farecast For $115,000,000

Microsoft has purchased the innovative travel service "Farecast" for a reported $115,000,000. SeattlePI has more about this breaking story. Farecast uses a predictive algorithm to help users determine if airline ticket pricing is poised to go up or down from the current levels and thus helps to find bargain pricing online.

Rather than develop extensive "Web 2.0" features internally, it is becoming very clear that Microsoft is trying to fuel their massive new web initiative with cash, buying companies like Farecast (and Yahoo) that can make Microsoft an immediate player in the rapidly evolving online environment.

Disclosure: Long on YHOO

Wall Street Journal: Yahoo and Google May Become Search Bedfellows

The Wall Street Journal is reporting that Yahoo and Google are closer than ever to a deal where Yahoo would outsource their search monetization to Google. Google continues to do a much better job of producing revenue from searches - some estimates suggest that Google gets more than twice Yahoo's revenue per search click.

Yahoo also is continuing to negotiate with AOL as part of Yahoo's efforts to stave off a takeover by Microsoft.

The Journal suggests that Yahoo's April 22 earnings report may play a key role in the Microsoft takeover argument. If Yahoo comes in with strong earnings it will strengthen the idea that the Microsoft bid is too low, but if earnings are weak it will support Microsoft's efforts to force a Yahoo merger against the will of the current Yahoo board.

Disclosure: Long on YHOO

Microsoft's Live Rome Edition. The Empire Stikes Back?

Harrison Hoffman, reporting at CNET, is impressed with the news feature that Microsoft is now bringing to the LIVE search environment as part of the changes to LIVE that are codenamed "ROME" and are to be released this spring. LIVE has struggled for some time to take market share from Google and/or Yahoo, and so far LIVE has failed to deliver.

Thus despite the cleverness of the Microsoft LIVE team I'm skeptical that they can do much to pull readers away from Google's excellent Google news service unless they manage to bring news directly into the explorer browser. Microsoft has a sorry history of losing to Google in virtually every head to head search item, so it is hard to bet that LIVE news will fare much better given that it does not even appear to include as many news sources as Google News.

PageFlakes Low Pageviews & Out Of Gas (cash)

Personalized web page startup Pageflakes is running out of cash and is desperately seeking a buyer reports Gigaom. Pageflakes aggregates RSS feeds and widgets in a customizable AJAX-based personal web page.

Pageflakes has around 1.5 million visitors a month and over 200,000 registered users. However that pales in comparison to their closest pure competitor Netvibes. However, the real competitors are Google's iGoogle, Yahoo's 360, Microsoft and AOL which too offer personalized web pages. The cost of these services is borne by their core offerings.

However, Pageflakes's personalized page is their core offering and it is much harder to monetize. Further to garner premium ad dollars the site needs serious traffic, which costs money. Again the majors can acquire traffic simply by putting up a "tab" to their personalized web page offerings.

According to Gigaom Pageflakes is just the tip of the iceberg and many 2005-2006 consumer web startups that rely of on VCs money will find life increasingly tough once the money stops flowing (See Crash 2.0 Coming). At least Pageflakes has interested buyers, even if they are not big spenders.

Search Engines Must Delete Data Within Six Months

A European Commission advisory body on data protection has said that search engines should delete data held about their users within six months reports the BBC.

The proposed rule specifieds that "Search engine providers must delete or irreversibly anonymise personal data once they no longer serve the specified and legitimate purpose they were collected for."

Google and Yahoo anonymise user data after 18 months and MSN does the same after 13 months. The body said search companies were not "clear enough" on their data protection policy and the recommendation is likely to be accepted by the European Commission and could possibly lead to a clash with search companies. The recommendation could have broader implications such as getting user consent before serving them personalized advertisements.

Peter Fleischer, Google's global privacy counsel, said in a statement: "Google takes privacy incredibly seriously; protecting our users' privacy is at the heart of all our products. It is the reason we were the first company to commit to anonymising our search logs, and also why we dramatically shortened our preference cookie lifetime."

Search engines presently collect and store information every search query such as search term, IP address, browser type, time, and number of clicks. The search engines say this information it required to better serve the user. The advisory body said search engine providers had "insufficiently explained" why they were storing and processing personal data to their users and that personal data of users should not be stored or processed "beyond providing search results". The report also said search engines did not need to gather additional personal data, beyond the IP address of a machine being used, in order to deliver basic search results and advertisements.

The advisory body said, "Search engine providers mention many different purposes for the processing, it is not clear to what extent data are reprocessed for another purpose that is incompatible with the purpose for which they were originally collected". Thus search engines should not use personally identifiable data to improve their services or for accountancy purposes. Nor should personal data stored for security purposes be used to improve services and if search engines enriched personal data about users from third parties they could be breaking the law unless customers had given explicit consent. It said users should have the right to access, inspect and correct all the personal data about themselves held by search engines, including their profiles and search history.

The report issued a set of obligations to search engines firms, including:

• Search engines should get informed consent from users if they correlate personal data across different services, such as desktop search
• Search engine providers must delete or anonymise (in an irreversible and efficient way) personal data once they are no longer necessary for the purpose for which they were collected
• Personal data should not be held by search engines for longer than six months
• In case search engine providers retain personal data longer than six months, they must demonstrate comprehensively that it is strictly necessary for the service
• It is not necessary to collect additional personal data from individual users in order to be able to perform the service of delivering search results and advertisements
• If search engine providers use cookies, their lifetime should be no longer than demonstrably necessary
• Search engine providers must give users clear and intelligible information about their identity and location and about the data they intend to collect store or transmit, as well as the purpose for which they are collected

Google And The Enterprise

Google has done an amazing job of capturing the imagination, and more importantly the search queries, of hundreds of millions of web surfers. Google has also turned that attention into a huge source of revenues with which they have built one of the world's great technology companies.

But if former Microsoft employee and veteran search watcher Robert Scoble is correct is his assessment which is the same as many other analysts, Google is now beginning a fairly aggressive push to go after the enterprise market - a market dominated by Microsoft products. Scoble thinks Google CEO Eric Schmidt is basically on a five year plan to take over from Microsoft as the enterprise software leader.

Google's strategy to take over the corporate enterprise space is intriguing because it is based on the idea of providing high quality, well engineered software along with a massive cloud computing network at little or no cost to companies. Although there are some small charges for a handful of Google applications most Google applications - such custom search, gmail, Google spreadsheets and documents, and blogging tools - are free for the taking. All of these can easily be scaled up and adapted to many enterprise computing tasks such as document collaboration.

Silicon Valley Company Demographics

LinkedIn, the social network mostly inhabited by technology professionals, now offers a great feature that allows you to explore various features of the linked in crowd such as company affiliations, age, and years at a company.

This led Louis Gray to create this excellent graph:


Most interesting to me was the very low tenure time at Google, though this may reflect a large number of new hires rather than people leaving the company. However even established titans like Microsoft and Apple appear to have something of a revolving door where people are jumping and climbing aboard other big ships at a surprising pace.

Google's February Search Queries Decline 5%

In February, Google Sites extended its share of core searches to 59.2 percent, up from 58.5 percent the previous month. Yahoo! Sites ranked second with 21.6 percent, followed by Microsoft Sites (9.6 percent), AOL LLC (4.9 percent), and Ask Network (4.6 percent).

comScore qSearch 2.0 Report - Total U.S. Home/Work/University Location

Share of Searches (%)

Search Entity                Jan-08        Feb-08      Jan vs. Feb
Total Core Search            100.0%        100.0%         0.0
Google Sites                  58.5%         59.2%         0.7
Yahoo! Sites                  22.2%         21.6%        -0.6
Microsoft Sites                9.8%          9.6%        -0.2
AOL Network                    4.9%          4.9%         0.0
Ask Network                    4.6%          4.5%         0.1

* Based on the five major search engines including partner searches and cross-channel searches. Searches for mapping, local directory, and user-generated video sites that are not on the core domain of the five search engines are not included in the core search numbers.

Americans conducted 9.9 billion searches at the core search engines, representing a 6-percent decline versus January. Each of the five core search engines experienced search query declines as a result of February being a seasonally soft month for overall search activity. Google Sites saw more than 5.8 billion core searches, followed by Yahoo! Sites with 2.1 billion, and Microsoft Sites with 953 million.

comScore qSearch 2.0 Report - Total U.S. Home/Work/University Location

Searches Query Volume by Site

Search Entity                Jan-08        Feb-08      Jan vs. Feb
Total Core Search            10,492         9,882        -6.0%
Google Sites                  6,139         5,855        -5.0%
Yahoo! Sites                  2,332         2,136        -8.0%
Microsoft Sites               1,030           953        -7.0%
AOL Network                     514           488        -5.0%
Ask Network                     475           450        -5.0%

* Based on the five major search engines including partner searches and cross-channel searches. Searches for mapping, local directory, and user-generated video sites that are not on the core domain of the five search engines are not included in the core search numbers.

Source: comScore

Web 2.0 Bubble Bursting - Crash 2.0 Coming

Dow Jones VentureSource released a report on venture capital investment in Web 2.0 companies Tuesday saying that "investment boom may be peaking."

A total of 178 deals received $1.34 billion in 2007, an 88% increase over 2006. Of that Facebook received $300 and Ning.com received $44 million. The rest of the distribution does not look too good from there. Venture capital investment has been sustaining many Web 2.0 startups, which are often chasing the same users. When the money dries up so will most Web 2.0 companies unless they find a new source of revenue.

U.S. Web 2.0 Investment by Region, 2006-2007

                         2006                           2007
              Deals     Investment (MM)      Deals     Investment (MM)
                     
Bay Area              74         $431               72*         $721*
New England           15         $79                20          $158
Southern California   10         $41                14          $115
New York Metro         9         $18                25           $58
Pacific Northwest      6         $35                13          $140
Southeast              6         $24                 7           $47
Mountain (CO, AZ, UT)  4          $7                 7           $31
Texas                  3         $10                 2            $4
North Carolina         2          $3                 2           $10

*Includes Facebook

"The beauty of Web 2.0 companies is that they can do so much with so little. A few million dollars and they're not only up and running but attracting eyeballs and advertisers. 2008 may be a make-or-break year for many Internet companies with business models relying on advertising. The slumping economy, coupled with a slowdown in click-through rates for online advertising, is going to pose a real challenge to their ability to generate revenues and position themselves for an exit," said Jessica Canning, director of global research at Dow Jones VentureSource.

Web 2.0 Bubble Bursting - Part 1

Yahoo to Microsoft - We Are Worth $40 Per Share

Yahoo initially spurned Microsoftś offer of $31 per share arguing that it was far too little and that a merger was not in the interest of Yahoo shareholders. Jerry Yang, in a letter to shareholders about a month ago, vaguely outlined his vision of a Yahoo that would improve in the coming years. The Yahoo improvement plan has now been articulated in much greater detail along with assumptions about new revenue coming from advertising and expansion of Yahoo properties. Lots of new revenue claims Yahoo. Leading tech market watcher Henry Blodget provides an excellent financial breakdown here. Henry is skeptical of the assumptions but agrees that if they are accurate then Yahoo is indeed worth $40-50 per share.

I see this move as something of a Hail Mary pass to stave off a merger, with the added bonus of trying to justify another few dollars increase on the bid from Microsoft before what now appears to be a very likely takeover of Yahoo. Shareholder discontent is high enough that Microsoft need not do much to win a proxy fight with the existing Yahoo board.

Disclosure: Long on YHOO

Google vs. Microsoft, Yahoo edition

As Microsoft´s merger with Yahoo becomes increasingly likely, Google is continuing to make their concerns public. Speaking in Beijing, China, Google CEO Eric Schmidt said:

"We are concerned that there are things Microsoft could do that would be bad for the Internet,"

Schmidt did not elaborate on this concern, which has also been expressed by Google in many other venues. Clearly however Google worries that the combined Yahoo Microsoft might use Microsoftś browser and operating system dominance to route traffic to their own sites and searches and away from Google, which is still the search engine of choice for the overwhelming majority of internet users.

Reuters Report

Disclosure: Long on YHOO

Ustream TV negotiating with Microsoft for buyout

Ustream TV is one of a crop of "Lifecasting" startups that offer a voyeuristic spin to the video uploading and viewing experience. Lifecasting's biggest celebrity to date is Justin Kan at Justin.TV, who has been broadcasting his life 24/7 for about a year now.

Rumors are suggesting that Microsoft has offered Ustream $50 million and Ustream will probably reject this offer despite the fact it has only about $2 million invested so far in venture capital, and presumably low revenue. Microsoft's interest appears to be as an advertising platform for Microsoft products, perhaps a clever move in that Microsoft can amortize this type of aquisition over many years and reap the advertising rewards forever.

The rumors come from Silicon Valley's online gossip rag Valleywag, which for all the criticism for the snarkiness and inaccuracy of the personal attacks often does a good job of reporting on "real" tech news items. Valleywag reports that Ustream was offered 50 million by Microsoft and that it's likely to turn this offer down, and that some sort of activity has been confirmed by the Ustream CEO Brad Hunstable.

Facebook Instant Messaging Coming Soon

TechCrunch is reporting tonight that an IM application is coming to Facebook and launching to the public soon - perhaps in the coming week. TechCrunch's report.

A Facebook IM will almost certainly kill off third party Facebook applications that deliver IM services, showing one of the perils of startups that "build for Facebook" or any other major player in the online space who might decide to deploy a similar application and pull the rug out from under the unlucky startup at any moment.

More importantly will be the impact of Facebook IM on other major messenger services such as those provided by Microsoft and AOL, and perhaps even microblogging tech favorite Twitter.

Heavy users are clearly tiring of using dozens of applications to communicate with friends and associates. The surging popularity of new social media aggregator Friendfeed is a testament to how hungry early adopters are for applications that can simplify the process of publishing and communicating to the broader web, though Facebook's new IM entry is unlikely to shake things up all that much given the increasing demand for more robust forms of communication than that offered by IM.

Microsoft Buys Another Online Ad Firm

Microsoft (MSFT) has acquired San Francisco's Rapt, an online ad management company. The purchase price undisclosed. Microsoft has been on a buying spree to catch up to Google in the online search and advertising space.

Microsoft will integrate the Rapt into its Atlas Publisher Suite, acquired as part of the $6 billion aQuantive deal last year. From Microsoft's press release:

With the inclusion of Rapt, the Atlas Publisher Suite allows Microsoft to provide its customers with integrated asset and inventory management, forecasting, yield and sales management, and ad delivery and operations.

CNET Networks, Dow Jones & Company, Expedia, Fox Interactive Media, Microsoft, MTV Networks, NBC Universal, The New York Times Company, Reuters, USA TODAY, Yahoo and many others.

Google Launches "Google Sky" Before Microsoft Launches World Wide Telescope

Microsoft's World Wide Telescope is rumored to be one of the greatest applications to hit the desktop in many years. It brought popular blogger Robert Scoble to tears, and was a big hit at the elite TED conference in California.

Only one problem - World Wide Telescope is not available yet to any but a select few.

Enter Google's launch today of their astronomy application, Google Sky, which according to Google ".... turns your browser into a virtual telescope that can zoom and pan across the entire cosmos".

In what almost seems like a slap in the face to Microsoft's slow deployment of their much hyped application Google heaps on the hype at their blog about Google Sky:

All of this is accessible from any web browser, on any operating system, with no extra download required. And since staring up at the cosmos is an experience shared across the globe, we decided to make Google Sky truly worldwide, with 26 localized language editions (this marks our first Maps product to support right-to-left languages). Just visit sky.google.com to get started.

First, kudos to Google and to Microsoft for tackling projects like this that have at best marginal revenue potential. This is software and technology at its finest, providing teachers as well as students of all ages with exciting tools and experiences.

You almost have to feel sorry for Microsoft though, as *once again* Google has brought a beautiful new application to us faster and probably with an easier to use interface than Microsoft will have.

But in the meantime enjoy your star trek at http://sky.google.com!

Microsoft WorldWide Telescope!

AOL Buys Bebo For $850 Million

AOL is about to acquire Bebo for $850 million. AOL announces the Bebo acquisition. Bebo is the the third place Social Network in the US and far behind both Myspace and Facebook, but it is the first place social network in the British Isles and Second in New Zealand.

Based in London and begun in 2005, Bebo lists these features as major aspects of the Bebo philosophy of social networking:

Open Media: Open Media gives media companies free and open access to Bebo's users worldwide and the Bebo community free and open access to thousands of hours of premium entertainment content from some of the world's best known media brands.

Open Social: In November 2007, Bebo announced that it is joining OpenSocial, a set of common APIs for building social applications across the web. In addition to this Bebo announced plans for a Developers Platform.

Most analysts argue that AOL's internet prospects have been declining for some time, and this move is likely to breath some life into the sagging AOL empire. This also may suggest that AOL and Yahoo are now extremely unlikely to merge given the size of this deal. CNBC has more about this deal and how it might affect the proposed Microsoft takeover of Yahoo.

Microsoft Buys Kidaro For Desktop Virtualization

Microsoft announced today that they are aquiring Kidaro, a leading provider of enterprise desktop virtualization.

Kidaro will be integrated into the Microsoft Desktop Optimization Pack, a part of Microsoft's subscription services.

Several key benefits to enterprise environments will be:

• Accelerate Windows Vista migrations by minimizing compatibility issues.
  
• Easier deployment of managed Virtual PCs to Windows desktops.
  
• Rapid reconstitution of corporate desktops.
  
• Minimize the tension between IT control and user flexibility by applying policies in locked- down corporate Virtual PCs while giving users more open access to the underlying host operating system. [ha - that one was written as only Microsoft can! I think I'd simplify that to "improve computer access and control"]
  
• Speed user adoption of desktop virtualization.
  
• Reduce IT investment in desktop image management.

Chalk up another clever Microsoft aquisition where they identify a leader in the space and then integrate the application into the Microsoft family of software and services.

Microsoft Press Release on Kidaro Aquisition

News Corp: "Not going to get into a fight with Microsoft" over Yahoo

Yahoo's chances of eluding a Microsoft aquisition dimmed today after comments by Rupert Murdock, chief of News Corp who said:

We're not going to get into a fight with Microsoft, which has a lot more money than us,"

Yahoo has been working very hard to avoid a Microsoft takeover, with CEO Jerry Yang stating in a recent letter to shareholders that Yahoo feels the Microsoft offer substantially undervalues Yahoo. However many market watchers see the takeover as very likely, either by eventual capitulation of the current Yahoo board or by their replacement in a proxy battle that Microsoft seems likely to win.

Today's statement from News Corp is another nail in the CEO coffin that Microsoft appears to be building for Yang and at least some of the current Yahoo board members.

Disclosure: Long on Yahoo

Firefox 3.0 beta 4 released

With 17 percent of the market and growing, Firefox has been slowly gaining ground on Microsoft's internet explorer with 75 percent of the market share. Microsoft is down some 4% from a year ago.

Mozilla announced today that Firefox 3.0 beta 4 is now downloadable here, with some 900 (!)enhancements from the previous version.

Ozzie to Om - Microsoft on the shifting Microsoft landscape

Om Malik has a piece today detailing his discussion Microsoft's future with Ray Ozzie, one of microsoft's key players and probably the key architect of overall online strategies for Microsoft.

Here is the interview at GigaOM.

Microsoft is in a difficult business position now as many applications and many major online projects are moving off of desktops and local servers and into cloud computing services such as that offered by Amazon.com, which Ozzie compliments as the first major effort in the utility computing space.

Microsoft appears to be moving powerfully into cloud computing, though it was also notable at this year's Computer Electronics Show (CES) that Microsoft was also advertising the
"home servers" as a small business solution.

To date, Microsoft's internet success stories are few and far between, and they are watching Google eat and serve a lot of free lunches. As the competition heats up with the likely merger of Microsoft and Yahoo, a lot of change could happen very fast.

DIGG Says Sale Rumors Are Not True

DIGG's Jay Adelson has strongly implied that they are _not_ about to be sold and called the rumors of a Google and Microsoft bidding war completely unfounded.

Also, we hear from Digg Co-founder Owen Byrne that the rumors appear to be false though he noted at his blog that he would not necessarily be in the loop with a sale decision.

Owen even suggested that the rumor of the sale brings into question the credibility of TechCrunch, though I'm guessing TechCrunch had a "good" lead on this story but not necessarily an accurate one. Supporting the rumor may be the fact that Google and Microsoft have not denied they are in talks to buy DIGG. Given that deals of this size will influence stock pricing one would expect them to quash a false rumor.

Perhaps there are simply a large number of nuanced discussions going on between big players most of the time, and clearly there is always a price at which DIGG or others will sell. Thus most of the rumors about "discussions" are not really true or false, though they are often misleading.

Digg.com - Sale May Be Soon

Although Digg has been rumored to be for sale for some time, this time it appears likely to happen. Most reports suggest Google as the most likely Digg buyer with the possibility that Microsoft will also get in on the bidding. Both Google and Microsoft have extremely strong cash positions though they also presumably have many aquisition targets in mind.

Best bet? Digg will be sold to Google for about $200,000,000.

Congratulations will be in order for Kevin Rose and the Digg major holders and investors, but I’d like to know from the key Diggers if they’ll feel any loyalty to the new owners or to the project. Also, do they think they are owed more than … zero… on this deal?

Social sites do offer their participants something of value = participation and platform - but are there “losers” in these equations?

How do the high level participants who have put in thousands of hours and made the site what it is feel about the huge cash outs by founders and investors?

Many, including billionaire Sir Richard Branson of Virgin, have suggested that the distribution of equity during the *liquidity* events does not properly reflect the building of equity. Entrepreneurial capitalism correctly asssumes you need to highly reward risk to get folks to take business risks and innovate, but to get optimal production and innovation I would suggest we need to pay “deeper” on these big internet deals.

In the case of a YouTube, DIGG, or Facebook I’d find a way to reward those down the food chain in some proportion to their contribution to the enterprise, partly for the simple reason that even a modest reward would brand the mega deals as “fairer” than simply a situation where fat cats effectively exploit self-motivated worker bees who have generated the user content and social networking that the market values so highly.

But don't listen to me - let's hear what the big diggers say after the Digg deal closes, and more importantly if they just keep on digging or ask for at least a small piece of the action.

Don’t Be Freetarded

Reposted from the KeeneView blog. Of the many sins that Silicon Valley practices, none are more dangerous or prevalent than the sin of smugness.

Savio Rodrigues has a good posting entitled Microsoft will prevail in the face of Freetards. His point is that Microsoft is learning from and adapting to the open-source movement, while the open-source movement is so enamored with "free" that they are not paying enough attention to the total cost of ownership from a customer's perspective.

Let's be clear - the free part of open source is a great innovation and worthy of a few minutes of self-satisfaction. The aftermath of the Y2K bubble was the erection of enormous barriers around IT to prevent tem from trying anything new that would cost the company money.

Free provides a "frictionless" entry point for new technology products into the corporation after finance barred the door. Free also enables technology self-service across the corporation, making it possible for anyone with an internet connection and a geek gene to get as wired as they wanna be.

However, free is only worth so much. If it takes me 3 hours to get my "free" open source WaveMaker download working, it cost me however much I or my boss thinks my time is worth x 3 = not free. Similarly, even if an open source product (for example Dojo) is technically superior in every way to Silverlight, that superiority is of no practical value if it is easy to hire experienced Silverlight developers but next to impossible to find, let alone hire, Dojo developers.

Thinking that free is the only aspect of software that matters is freetarded. This is where Microsoft can beat the open source community in general, just as its .NET platform is beating J2EE.

Let me quote from the insanely great Fake Steve Jobs blog:

Red Hat, the single company freetards always point to when they want to prove that open source can make money, has turned inept, with nothing but bluster and bravado and a deluded belief that they're actually a thorn in Microsoft's paw. Bottom line: they're the new Borland. They're 15 years old and have been publicly traded since 1999 and last year they did all of $400 million a year in sales. Microsoft does more than $1 billion a week. That's right. Red Hat's entire fiscal year is a good three days for Microsoft.

Microsoft is onto us. Time for open source software vendors to think beyond free.

U.S. Searches For February 2008

Hitwise, just released searches traffic for February 2008. Google accounted for 66.44 percent of all U.S. searches in the four weeks ending February 23, 2008. Yahoo! Search, MSN Search and Ask.com each received 20.59, 6.95 and 4.16 percent respectively. The remaining 46 search engines in the Hitwise Search Engine Analysis Tool accounted for 1.87 percent of U.S. searches.

Percentage of U.S. Searches Among Leading Search Engines
Domain              Feb.-08       Jan.-08        Feb.-07
www.google.com      66.44%        65.98%         63.90%
search.yahoo.com    20.59%        20.94%         21.47%
search.msn.com       6.95%        *6.90%         *9.30%
www.ask.com          4.16%         4.21%          3.52%

Note: Data is based on four week rolling periods (ending 2/23/08, 1/26/08; 2/24/07) from the Hitwise sample of 10 million US Internet users.
* - includes executed searches on Live.com and MSN Search.
Source: Hitwise

Silicon Valley / Tech's Highest Paid

Vanity Fair just released "Windfall Report", which lists the Top 50 money makers in the U.S. for 2007. Here is of money makers in Silicon Valley / Tech.

Microsoft (MSFT) Chairman Bill Gates: $2.8 billion
Oracle (ORCL) CEO Larry Ellison: $1.1 billion
CDW Founder Michael Krasny: $970 million
News Corp. (NWS) CEO Rupert Murdoch: $960 milion
Microsoft (MSFT) co-founder Paul Allen: $775 million
Google (GOOG) CEO Eric Schmidt: $600 million
Charles Schwab Founder Charles Schwab: $385 million
Viacom (VIAB) CEO Sumner Redstone: $362 million
Right Media (YHOO) CEO Michael Walrath (sold to Yahoo): $340 million
IAC (IACI) CEO Barry Diller: $300 million
aQuantive (MSFT) Founder Nicolas Hanauer (sold to Microsoft): $282 million
Google (GOOG) Founding Member, Ram Shriram: $272 million
KPCB Venture Capitalist John Doerr: $250 million
Star Wars' Producer George Lucas: $200 million
Covansys (CSC) Founder Ray Vattikuti: $195 million
Salesforce.com (CRM) CEO Marc Benioff: $190 million

Operation Google: The Search War Has Started

Bill Gates will today announce the launch of Search Server 2008 to rival Google's Search Appliance. The software allows users to search files and documents inside their corporate network. However unlikely the expensive Google Appliance which is a box with software, Microsoft will offer the service as a free software download. Yes, you heard that right! No hardware, no packaged software. It will be a web offering featuring online administration, reporting and provisioning features.

Essentially, Microsoft is beating Google at it own game with this web offering. Today's announcement targets Google's weak spot - Enterprise. It is also interesting to note that for the Search Server Microsoft's has adopted Google's traditional sales model, that does not require customers to buy expensive hardware, lock-ins and Google has adopted Microsoft's style tactics with the Google Appliance.

All Paths Lead To Search
Couple of weeks ago Microsoft announced the purchase of FAST Search, an enterprise search specialist. The thinking is that if customers start using Microsoft's search products on their network they might start using Microsoft's internet search and advertising products.

Last week, Google announced a web site publishing tool called Google Sites for enterprise users to set up and run their team collaboration similar to SharePoint, which allows workers to share documents and plan projects on secure web sites.

If Microsoft gets traction on the enterprise side and that translates to search traffic on Live.com and ad dollars on adCenter. Then Microsoft would have made inroads into Google's lucrative advertising empire. Google will not sit on the side lines either. Operation Google has begun - the search war is under way.

SaaS To Account For 18% of Software Sales In 2013

The Software as a Service or SaaS market is reportedly growing but is still relatively small. 6% of the software sales in '07 was SaaS and this is expected to grow to 15-18% in 5 years - which is still small. This, according to the OpSource Summit. Gartner expects SaaS to grow at 22.1 percent until 2011 for the aggregate enterprise application software markets and predicts that 63 percent of products in the software infrastructure market and 56 percent in the software application market will support Web services.

A panelist at the summit described SaaS as the thin edge of the web for utility computing. They went on to say that objections to SaaS in the enterprise are still quite high despite it being an important way to deliver critical functionality without having to maintain the apps internally, being able to push out upgrades on a continuous way, and having a low TCO.

Some of the top SaaS providers include:

• Salesforce.com - CRM solutions provider
• Adobe - looking at bringing Photoshop online
• Netsuite - another CRM solutions provider
• SuccessFactors - talent management solution
  
• Axentis - governance, risk and compliance solutions provider

Somewhat surprisingly, Microsoft is also in the Saas space. Other companies in this space are Oracle, IBM, and SAP. There are also others that provide web-based content management systems and analytics solutions. Clearly, this area has a lot of teeth. There is nothing worse than teams using different versions of the same software giving rise to file incompatibility issues.

Microsoft's New Attempt - SkyDrive

Wow! is this the same company that was sitting idle which Google reached US$200 Billion in market cap. Yesterday, there was the semi open sourcing of code for Windows and related applications and today SkyDrive. SkyDrive is Microsoft's online storage service. Microsoft launched the product last year giving user 500MB of free storage. Today the company announced that it is increasing that by 10 times to 5 G of free storage. Previously SkyDrive was only available in the U.S., U.K. and India. Today the service is being rolled out to 38 other countries.

SkyDrive competes with XDrive (AOL), Box.net, Twango (Nokia), Gmail (Google) and S3 (Amazon). Microsoft is eager to stem the tide of defections from Hotmail to Gmail, S3 and other online services. However, I feel the company is moving fast to stem this trend and make an announcement before Google comes out with GDrive and starts making noise.

January Search Rankings

In the January 2008 analysis of the Top 50 properties worldwide where search activity is observed, Google Sites led with 7.7 billion searches. Yahoo! Sites ranked second with nearly 2.5 billion searches, followed by Microsoft Sites (1.1 billion), and AOL LLC (903 million).

comScore Expanded Search Query Report January 2008 Total U.S. – Home/Work/University Locations Source: comScore qSearch 2.0
Expanded Search Entity	Search Queries (MM)
	Dec-07	Jan-08	Percent Change
Total Expanded Search	13,523	14,595	7.9%
Google Sites	7,165	7,735	8.0%
Google	5,651	6,181	9.4%
YouTube/All Other	1,514	1,554	2.6%
Yahoo! Sites	2,363	2,456	3.9%
Yahoo!	2,326	2,427	4.3%
All Other	37	29	-21.6%
Microsoft Sites	963	1,060	10.1%
MSN-Windows Live	927	1,024	10.5%
Microsoft/All Other	36	36	0.0%
AOL LLC	N/A	903	N/A
AOL	N/A	522	N/A
MapQuest/All Other	N/A	381	N/A
Ask Network	416	477	14.7%
Ask.com	238	286	20.2%
MyWebSearch.com/ All Other	178	191	7.3%
eBay	508	467	-8.1%
Fox Interactive Media	350	384	9.6%
MySpace	342	376	9.9%
All Other	8	8	0.0%
Craigslist.org	220	256	16.4%
Amazon Sites	215	167	-22.2%
Facebook.com	102	109	6.2%

Source: comScore

Web 2.0 Bubble (Bomb 2.0) Is Bursting

ZDNet has a great article comparing the events that lead to the bursting of of the first internet bubble (Dot Com Bomb) to the bursting of the Web 2.0 bubble called Bomb 2.0. The article suggests that Bomb 2.0 is underway. Google is down 27% since the start of the year. Just as Time-Warner set off Dot Bomb 1.0 by acquiring AOL, Microsoft may have set off the second through its bid for Yahoo. More>>

Microsoft - Follow The Money

Microsoft's bid for Yahoo is all about online advertising. Steve Ballmer, Microsoft's CEO has said that in a few years online advertising will account for as much as 25% of Microsoft's revenue. Ballmer is hoping that acquiring Yahoo will help Microsoft catch up to Google. However, acquiring Yahoo will not give Microsoft the revenue nor the search market share it is seeking for, as Yahoo's strength is in display advertising not search advertising.

Microsoft Seven Times Bigger Than Google
Microsoft's share of the display advertising market is already about 7 times larger than Google's. Yet, Microsoft's online business racked up a loss of $248 million during the quarter ending in December 2007. Microsoft and Yahoo combined will have a market share of about 25% versus Google's 1%.

Where The Money Is
Google accounted for 65.98% of U.S. searches, while Yahoo and Microsoft combined accounted for 27.84% of U.S. searches in January 2008. It is search advertising that is propelling Google. The revenue that Microsoft is seeking is in search advertising not in display advertising which the Yahoo purchase brings.


Focus On Search
Microsoft should be looking to really acquire Yahoo's search and related advertising business as that is where the growth is. Display is experience some softness in pricing as more and more and networks spring up daily targeting niche verticals. However, in the long run Microsoft should benefit for Yahoo technologies and properties that are strong in display as that is where users will be hanging out. Further Microsoft's relationships with Facebook and Digg should add to this. Hence that is why Google is busy working on applications and initiatives such as Open Social that will keep users hooked on Google.


Image Source: Forbes

Yang to Yahoos - Keep The Faith?!

Henry Blodget over at Silicon Alley Insider has a good summary of Jerry Yang’s Yahoo note to the troops articulating the reasons for the rejection of Microsoft’s offer and the company’s future plans. He gives Yang an A- but I'm not sure this is the kind of rallying cry these guys need right now.

I’m wondering if Yahoo's big failure happened many years ago when many lines of separation were drawn between technologists and most of the company management. I assume there were official lines drawn, but I’m talking more in terms of cultural differences.

For some contrarian investors bullishness about Yahoo rested on the assumption that the technologists would eventually have their day at Yahoo. The idea was that Yahoo has already created many great tools necessary to keep Yahoo competitive and interface with the broader developer community. Yahoo in theory could quickly bring far more awareness and use of Yahoo tools, effectively widening their footprint over the internet landscape. The Yahoo bulls also suggested that monetizing of traffic would improve, giving Yahoo a huge boost in profits given that historically Yahoo makes less than half as much as Google does per search.

What I'd like to know from Jerry is the plan for rapid technological empowerment at Yahoo. The kind of empowerment that keeps people working until the wee hours on projects that excite them and show great potential for company profits. ie the kind of empowerment Google's done with their folks.

It will take a LOT more than peppy emails and a combative stance to save Yahoo. The buzz from insiders and recent defections from Yahoo suggest that even internally Yahoos are more bullish about Google than they are about own company.

So, if we assume Yahoo has got to change course in a big way would Microsoft or News Corp be the best fit? From Yahoo’s perspective it appears they would jump on any deal where News Corp was willing to pony up as much as Microsoft. In many ways this seems like a more likely winning combination than Microsoft and Yahoo which would have a lot of initial, and perhaps long term, contentiousness.

Fox Interactive is run brilliantly, and applying these management principles to Yahoo could do a world of good to the bottom line of the combined company. Yet it will be difficult for News Corp to make the case that Microsoft isn't offering enough for Yahoo, especially when Microsoft ups the offer to about $35 per share as many think they will do soon. This would be a premium of almost 100% on Yahoo's pre-merger-news price of about $18 per share. Although the Yahoo board may stand firm and reject the offers, Microsoft is probably going to make an offer that Yahoo shareholders can't refuse.

Long on Yahoo

AOL's Transforming To Ad Network

AOL’s continues to build out advertising unit announcing two more purchases recently. Its advertising unit beat expectations when earnings were reported while operating income for its subscriber unit dropped 70% due to the sale of its internet access business in Great Britain and France.

Last week Time Warner's new CEO Jeff Bewkes, announced the company is looking at possibly shedding the traditional dial-up business, the company's cable unit and possibly spinning off its advertising business.

The company is organizing all their advertising divisions into a single unit to better compete with Google, Microsoft, Yahoo and ad networks such as Facebook and MySpace. The former CEO of TACODA, Curt Viebranz, will head the division.

Here is a list of their advertising acquisitions to date:

* Feb 2008, Buy.At, online affiliate marketing network
* Feb 2008, Goowy, widget creator
* July 2007, TACODA, behavioral targeting ad network
* May 2007, ADTECH AG, ad-serving and e-mail marketing network
* May 2007, Third Screen Media, mobile ad serving
* May 2006, LightningCast, streaming video/audio ad serving
* June 2004, Advertising.com, direct-response network

Potential suitors for the dial-up unit could be AT&T and Comcast for the cable business which includes TNT, TBS and others. No ideas what happens to CNN. Possibly it gets folded into its new advertising unit as a publisher.Bewkes, said that Microsoft’s Yahoo bid “demonstrates the value” of AOL, since Yahoo is a competitor of AOL.

YaFoxHoo? News Corp may bid against Microsoft for Yahoo

Many news sources are now reporting that serious talks may be underway between Yahoo and Myspace / Fox parent corporation News Corp.

Tech reporter Jessica Vascellaro at WSJ notes:

The deal would allow Yahoo to remain independent while giving News Corp. substantial control over a huge array of Internet properties and advertising opportunities.

News Corp is already a key internet player because they own Myspace and many Fox properties that have huge online visitation. Thus they could leverage the Yahoo aquisition to some advantage, perhaps through monetization optimizing, cross promotion, and other management efficiencies that could come with a merger.

The offer from News Corp is rumored to be in the ballpark of 50 billion dollars, which is about he same as the anticipated counter-offer from Microsoft after Yahoo rejected Microsoft's 46 billion dollar offer earlier this week.

Given equal offers it is very likely the Yahoo board will choose News Corp over Microsoft.

Disclosure: Long on Yahoo

Bill Gates Drops Facebook

Microsoft Chairman and Founder Bill Gates has stopped using Facebook and has delete his account after being hassled by thousands of fans. The Chairman was inundated by over 8,000 friend requested a day and thousands of loan refinance requests fueled by the mortgage meltdown.

Chairman Gates became so hooked on the site that he decided to invested $240 million regardless of valuation just to own a piece of it. He spent about 30 minutes a day chatting with friends and searching the site (ah that's where he got the idea to buy a search engine - more about this in another post).

A Microsoft spokesperson said that Chairman Gates hasn’t deleted his account, but that he has stopped using it because he was inundated with friend requests. However, another Microsoft spokesperson said later that sadly Chairman Gates has had to close this account.

Google Still Tops Search - Ask.com Gaining

How did the top four search engines perform in the first 4 weeks of the year? Data from Hitwise shows that Google accounted for 65.98% of all US searches. Yahoo followed with 20.94%, MSN Live Search at 6.9%, and Ask trailing at 4.21% which reflects an increase of 19% YOY.

"Search engines remain the primary way internet users navigate to key industry categories" according to Hitwise. Interesting growth trend is that travel, news and media, entertainment, business and finance, and sports all underwent significant increases in the share of traffic coming from search engines, from Jan'08 to Jan'07.

Google to Yahoo - Beware the Microsoft Poison!

Google is concerned that Microsoft could poison Yahoo with an aquisition, making the combined company less open, a state of affairs Google feels is key to the internet environment and was key to the sucess of Yahoo and Google.

It is easy to be sympathetic to the idea of openness and transparency as core values, but I would suggest that Google has more than enough internet opacity in their search ranking practices to make me skeptical of all their whining about how Microsoft won't play fair if they get a foothold in the search game.

It is true that Google has been more open than most companies, but they are still far less responsive to ranking problems and search issues than they should be. To the extent MS + Yahoo brings more competition to the space it might help Google see the light and practice more of what they preach about transparency. (A quick example of the lack of transparency - Google does not share with publishers the advertising revenue share for a publisher's own website. This would be a totally unacceptable practice offline but reflects the huge control Google now exerts over internet content and search monetization.

Meanwhile, Henry Blodget has some great advice for Yang and Balmer, but it’s clear to me that neither party will view things this broadly. I think there is only small difference in the IT worldview of management at Yahoo and Google, but a world of difference with Microsoft.

The contest for Yahoo is a fascinating situation because up until now Google has been very happy to watch Yahoo whither on the search vine. Now Google needs to consider a powerful partnership as a defensive attack on the Microsoft search potential after an aquisition.

Disclosure: Yahoo Shareholder : )

Microsoft + Yahoo > Google?

Most of the commentary about the possible Yahoo Microsoft merger from inside the internet community is very skeptical of the prospects of a merger, where most of the investment commentary from Wall Street seems to be positive although Microsoft shares lost enough value that clearly the broader investment sentiment about this is negative.

I'd suggest that Robert Scoble is right, and the Yahoo Microsoft deal is probably a good idea. Although Yahoo is in some ways a different culture from Microsoft, It seems to me that both of those corporate cultures have become bureaucratic, sluggish, and uninspired when compared to Google’s freewheeling yet very productive approaches. However, the majority of the thousands of Yahoo and MS employees are very impressive individuals, and certainly capable of great things as the online world is reinvented on a regular basis.

If Microsoft can pool the innovations of their excellent online efforts in the LIVE project with Yahoo’s superb developer support programs, and hire and inspire more people to have the evangelical zeal of Googlers, it could be a whole new online ballgame.

A big reason this could make sense for Yahoo and Microsoft is the online math. The traffic from Yahoo+ Microsoft is very substantial. By many measures Yahoo actually has more total traffic than Google already - it just does not have as much of the lucrative search traffic and does not monetize the traffic as well as Google. With Microsoft traffic, the combined Yahoo Microsoft company will still initially lag Google in search traffic, but it will have *far greater* total web traffic.

A fear of lawsuits over browser manipulations and lack of interest in what for Microsoft was a small revenue source led them to failure in the search business. Although the LIVE project was inspired, search share still lags so far behind Yahoo and Google that rolling all this into Yahoo search makes a lot of sense if Microsoft want a a piece of the online action they now see as critical to their success. The combined company would control an enormous share of global web traffic, and it won’t take too much imagination or innovation to redirect this traffic more profitably than now.

Microsoft remains the overwhelmingly huge legacy player in the information technology space. Google is the clear leader as the new player. Can Yahoo inject enough energy into the monstrous Microsoft machine to compete effectively in the online space? I think there are many potential pitfalls, but on balance you need to do the math, which says that in online footprint, content, and market capitalization:
Microsoft +Yahoo > Google.

News release from Microsoft

Disclosure: I'm a Yahoo Shareholder

Google Misses Estimates - GOOG Shares Crash

Google's fourth quarter earnings missed Wall Street estimates, sending the stock crashing after hours.

According to Thomson Financial, Google's fourth quarter revenue came in at $4.83 billion, which was up 51% from a year ago. After advertising sales costs revenue came in at $3.39 billion, below the $3.45 billion analysts had expected.

"We're very pleased with our performance this quarter," said Eric Schmidt, CEO of Google. "It reflects strong momentum in our core business, growing receptivity to our new business initiatives, and improved discipline in managing our operating expenses."

Google's closest rival Yahoo! also disappointed Wall Street when fourth quarter net income fell 23% from a year ago. Microsoft a laggard in the space is gaining some traction with users and this might give a lift to their search advertising unit adCenter. Which in turn would increase the pressure on keyword pricing which will ultimately affect the earnings outlook for Google and Yahoo!

Is A Yahoo! Takeover Imminent?

Last year when I met Terry Semel, Yahoo’s CEO, and asked him if a Yahoo takeover by Microsoft was inevitable, he looked at me as if he had swallowed a frog. This week at CES, Joe Hunkins asked David Filo, Yahoo’s co-Founder, the same question and if he had met with Bill Gates, Microsoft’s Chairman & Founder, to which Filo responded he had not. However, the evidence seems to be mounting to the contrary and rumor mills are gathering speed. Is this all baseless? Let's examine.

Microsoft, which is a distant third in the search market has outwardly stated that it has ambitions to be the leader in the domain. According to the latest Hitwise report of U.S. Searches (Dec 2007), Google continues to dominant with a 65.98% share, Yahoo follows with 20.88%, and Microsoft lags behind with 7.04%.

Microsoft’s Reality
There is simply no way Microsoft can close this gap organically. Hence, Microsoft has been coming at it from all angles such as the Facebook investment, which I thought a mistake (this week Bruce Jaffe, Chief Acquisition Officer, Microsoft left the company), the acquisition of Fast Search & Transfer this week and aQuantive earlier this year. The company was so eager to respond to Google’s foray into text to speech service 1-800-GOOG-411 that they spent a US$1 Billion to purchase Tellme. Tellme is a really a call center automation service not a text to speech service based on a web crawl as 1-800-GOOG-411.

The bottom line is Microsoft needs a major boost in search traffic to flow through its search property LIVE.com to challenge Google’s lead. The quickest and only way to achieve this would be an outright acquisition of Yahoo. This would give Microsoft 28% of the U.S. search market share, which is still less than 50% of Google’s U.S. search market share, but sufficient enough to be considered a formidable competitor.

Yahoo!’s Reality
Yahoo shares are trading near 52-week lows, giving it a market capitalization of approximately $31 Billion. However, this does not include the value of Yahoo’s investments such as Yahoo Japan, Alibaba.com and Alibaba Group. According to Valleywag, Yahoo Japan, of which Yahoo owns a third, is worth $25 Billion, putting Yahoo's stake in it at nearly $9 Billion. Alibaba.com, a Chinese e-commerce company in which Yahoo directly owns a 10% stake, is worth approximately $17 Billion, putting Yahoo's stake at about $1.7 Billion. Yahoo also own a 40% stake in Alibaba.com's parent company, Alibaba Group, which runs Yahoo China, which has an estimated of $8 Billion and $16 Billion. Yahoo has other investments like G-Market.

Based on the above calculation the combined value of Yahoo’s investments add up to over US$15 Billion. The current valuation of Yahoo based on the Nasdaq listing does not fully reflect Yahoo’s investments, which if realized would give Yahoo a valuation upwards of US$45 Billion.

Right Timing
Microsoft would be wise to take a run at Yahoo at the current valuation, acquire the traffic to fuel Microsoft’s search and advertising properties, become a formidable competitor to Google and possibly make realize a 50% return on its investment just by unearthing the full value of Yahoo’s investments.

Microsoft High Fashion PCs

The next gen of Microsoft PCs is shaping up to be fashionable. Yes, you heard right! Microsoft is staying au current recognizing that laptops are now more than just a useful device but more so a trendy fashion accessory. The company is coming out with high-fashion PCs and held a fashion PC show at CES to showcase some of their designs.

And, they are not the only ones. Sony, ASUS, Lenovo and Gateway are also in on the action and are coming out with more "pretty" computers. OEMs are taking a page from fashion designers and are blinging out laptop cases with anything from cow fur, aluminum, leather and carbon fiber. Apple hardware has long been very sleek and cool, thereby, attracting a lot of younger users and maybe even bucking this trend; whereas, Microsoft's has been more enterprise and less focussed on aesthetic design. This is a step in the right direction for Microsoft in capturing a younger consumer market and moving the needle a little in terms of their brand perception.

Video of Bill Gates' Last Day at Microsoft

Video parody of Bill Gates' last day at Microsoft.

Bill Gates' New Plan

Bill Gates gets to the office as usual.


He gets to work right away.


He takes a break and takes up singing.


Bono, do you need a vocalist?


Would you like a Zune with that?


Jam on! I think Bono will like that chord!


Wow! The fans are going to love this!


He should stick to his day job.


Hey Al, I am great at speeches and blogging.


My campaign can do without long speeches.


How about campaign refinance?


So George - did you like the movie?


The Men in Black.


He gets some acting lessons.


Are you seriously doing this?


He heads to Hollywood. Break a leg!

Microsoft Office 2008 for Mac

In what can only be an acknowledgement of the growing popularity of Macs and a lucrative market opportunity, Microsoft is finally coming out with an updated version of Office for Mac in mid-Jan. The previous version was Office 2004 for Mac. PC Mag has done a full review complete with screenshots. If you are a Mac user, it is reportedly faster, has a bunch of improvements, and depending on which edition you want runs from $149-499.

Google Tops Search Market

Google Search dominated the online search market in November according to a report by Nielson Online. Google grew its share of the U.S. online search market to 57.7% with 4.25 billion searches in November from October's 55.5%.

Yahoo came in second with 1.32 billion searches and a decreased market share of 17.9% from 18.8% in the previous month.

Microsoft Live was third with about 880 million searches and a decreased market share of 12% from 13.8% in October.

AOL was number four with approximately 332 million searches accounting for a 4.5% share.

Google Adding Blogs to Universal Search

Google is expected to start adding blogs in the next week or so to its universal search results, an initiative which was launched back in May. According to Marissa Mayer, VP of Search Products & User Experience, queries will return links to blogs alongside the images, news, books, local maps and video. This is indicative of the growing popularity and effectiveness of blogs which at last count were being created at 100,00 per day. The other big three search engines - Yahoo, Live Search, and Ask - currently include blogs as part of their search results in some form or the other.

Microsoft Delivers Ads For CNBC Web Sites

Microsoft will start delivering contextual ads, which are based on what the user is viewing, for CNBC.com later this month. Microsoft has struck similar advertising syndication deals with Digg, a site that lets readers recommend articles to others, and social networking site Facebook.

Microsoft AdCenter will handle the text-based ads and display ads will be handled by a combination of aQuantive. CNBC will manage multi-media sales in-house, some of which span the broadcast and web properties.

CNBC.com draws 2.6 million visitors a month, many of whom, according to Microsoft, represent a "high-quality" audience that advertisers are eager to reach.

Securing advertising syndication deals allows Microsoft to offer advertisers a wider pool of internet sites for ad delivery. It is part of Microsoft's push to gain ground on Google and Yahoo in the $40 billion market for Web advertising.

Hijacking Google?

An ISP in Canada is experimenting with adding content to user pages to get their attention and provide them with information. CNET has the particulars on this approach from Rogers, which acknowledged it is experimenting with splicing content onto existing websites.

Although I have not seen this technique used by my ISP Charter Communications, they routinely have what I think is a sneaky practice of pushing out Charter advertising listings during some searches that are formed incorrectly.

Frankly this is an area where Microsoft has not been very aggressive at all, owning as they do the browser used by some 75%+ of the surfing market. I've been amazed at how MS has chosen not to push the legal limits by doing more to default search and services to MS properties.

Microsoft to Offer Mobile Ads

In a bid to claim more of the mobile market and to catch up to competitors, Microsoft is reportedly set to launch mobile advertising on Monday on the U.S. version of MSN Mobile. Mini banners and text ads will be displayed on the MSN Mobile portal along with news, weather, stock, and movie info, search, email (Hotmail), IM (Messenger), and Microsoft's blogging and social networking platform (Live Spaces). They apprently already run ads in other global markets. As you may recall Microsoft bought online advertising company aQuantive in May for $6 billion in response to Google's Doubleclick purchase for $3 billion.

Google's Mobile Ads are text-based and allows users to navigate to the advertiser's mobile site or call the business directly. With Yahoo Mobile Ad Network, it appears that advertisers can choose from display banner ads, sponsored search links, video spots, in–game or in–application placements, call, SMS, or if you don't have a mobile site, they will even build one for you.

Blog Council Formed to Wintry Reception

The Blog Council has come to order. It has been formed, site launched, and first meeting set to convene in January. Per their official description, the Blog Council is a community for official corporate blogs and bloggers that represent major global corporations acting as a strong advocate in support of responsible, ethics-based corporate blogging. Their mission is to create best practices (global corporate blog directory, standardized blog terminology glossary, moderating and responding to comments), community, ROI, and advocacy. Other initiatives include proactive blogger relations, blog policy, blogs as customer service tools, ROI of blogs, creating "brand love" in the blogosphere, managing blogs in multiple languages, dealing with employee personal blogs, and how to engage bloggers to write about a company. Council member companies include AccuQuote, Cisco, Coca-Cola, Dell, Gemstar-TV Guide, General Motors, Kaiser Permanente, Microsoft, Nokia, SAP, Starwood Hotels, and Wells Fargo. I don't see Google on the list, at least not yet, but the Official Google Blog is more popular than all the others' blogs. Neither is Sun on the list whose CEO, Jonathan Schwartz, has a blog. The council is clear to differentiate itself from and as not representing personal, SMB, and professional bloggers.

Corporate blogging is the corporate adaption of blogging. And, given that corporations have a corporate and legal reponsibility to protect themselves and shareholders, it seems logical that they would have some rules of engagement around this. But this smells of a corporate stranglehold on an inherently open, unregulated, free speech realm. The Council's own site is a blog but already I don't see how you comment other than email the "Blog Council". I don't know about anyone else, but I don't read any of the member council company blogs; okay, maybe I've looked at a Microsoft Blog before. I guess I might check out some of the others in time to see the fruits of this endeavour. Will all this policy-making help or hinder corporate blogging?! I guess that is yet to be seen but people are mostly skeptical.

Robert Scoble writes:
"If your company needs help "getting it" then you shouldn’t be hanging out with other companies.... Demonstrates that the industry has a LONG way to go before it understands the real value that seemingly unimportant conversations have."

What do you think?

A Comparison of Google, Yahoo, and Microsoft's Indexes

[Update – October 5, 2007] Five days after posting this article (in French), 118 pages of the site are indexed on Google, which wins across the board for exhaustiveness, relevance and speed. Without contest!

Yahoo! and Microsoft are still at the same point…and the others are worse: it’s unknown on Ask, and Exalead shows a thumbnail of a parking service for my site, which was parked over a year ago. Hello, relevance (it’s l'exception française)!

INTRODUCTION
A few days ago I uploaded XBRL.name, a glossary in 7 languages on IFRS terminology.

For one, I was surprised to see that the domain name, which has existed on the site Studio92.net for over two years, had retained the PR4 of the page it was on, but that wouldn’t last!
At the same time, you can imagine how avidly I’m on the lookout to see when my site will be indexed in the search engines. I check every day on GYM. The results are edifying! Here is the status as of October 1, after the site was uploaded on September 23, in other words in eight days.

I should specify that it’s not completed; only 1/7 of the site is finished, a little less than 200 pages out of approximately 1400 expected when the site is complete.

Finally, this post has no pretension to being more than it is: the simple tracking of a week of the indexing of a new site. Nothing scientific here, just a personal experience. [Top]

INDEX SIZE
It goes without saying that each of the three index generously exceeds 20 billion web pages!!! If you’re nostalgic, click here...

The engines don’t communicate much on the topic, except Microsoft, which makes a point to let you know it has caught up, quadrupling the size of its index from 5 billion to 20 billion pages. OK!

However, Yahoo! was already declaring more than 19 billion pages in… August 2005 (despite Jean Véronis’s questioning) and Google, 24 billion pages three months later (see here, end of page 5)!

So while I partially agree with Eric Enge when he states that At some level, the exact index size is not a big issue, unless, your index is simply too small, I agree less with his idea that increased index size is related to increased relevance (In short, Microsoft needed to make a move of this type to improve their relevance).

Relevance is not necessarily dependent on coverage (What's at issue is coverage... and if you don't have the related sites in the index, you can't return the right result), since the engine may very well have the relevant site in its index and still keep quiet (not list a result).

And of course, Microsoft presented a demo to illustrate its point of view, specifically on "shelli segal" and the site of a corresponding designer, which appears first on Live Search but makes the grave error of being absent in Google’s index!

Might one suspect Microsoft of cooking up an ad hoc search just to justify its relevance, relevance, relevance?

A good way to find out is to test it with xbrl.name, where the three search engines are on equal footing against it, since it was uploaded eight days ago without being intentionally presented for indexing; I just put the link on my blog and on several other sites. [Top]

GOOGLE INDEX
Until yesterday, Google returned 190 results total and gave the following excerpt for the site:

My SPIP site. Search. Home page. My SPIP site. Follow-up of the site's activity RSS 2.0 Site Map Private area SPIP template.

That is, it had saved the SPIP installation I tested, before opting for a site in HTML.

But today – sigh of relief – Google returns 300 results and finally sees the new version of the site: Conclusion: Google took note of the site in 8 days, although the content of the glossary does not yet seem to be indexed. [Top]

YAHOO!'S INDEX
Yahoo! returns 30 results and the following excerpt:

This is the placeholder for domain xbrl.name. If you see this page after uploading site content ... This page has been automatically generated by Plesk.

Plus one page correctly indexed. What about the 200-some others?

So Yahoo! presents a tenth as many results as Google and just one page indexed. [Top]

MICROSOFT'S INDEX
Just one result! Period. Same excerpt as Yahoo.

Then that last line that kills me: “Are you satisfied with Live Search? Tell us."

What to say? That in light of what preceded it, Microsoft definitely deserves its third place. Dead last!

The ranking is confirmed by my blog’s visit stats, as you can see in the table below:

Search engines were the source of 2,826 visits on Adscriptor during September and represented 41.21% of total visits (188 visitors and 242 pages viewed per day, with an average time on site of 1'35'' per visit) (not everyone’s named Otto, fortunately for him ;-).

With 2,575 referring links, Google alone represents >91% of these visits, versus 5.4% from Yahoo! and three times less than Yahoo! for Microsoft. Google is overwhelming superior. Why?

Clearly, if Google weren’t there, I would have a presence on the Internet…with zero visibility on search engines! [Top]

INDEX CACHING AND REFRESHING
In addition to size and relevance, one last aspect related to engine indices concerns their refreshing frequency, with a cache cycle that has shortened considerably recently for Google (I don’t use Yahoo! or Microsoft enough to say about them). Before, it seemed like the cache stayed around for a while and you could retrieve information several weeks later; now, it’s only a matter of days. For example, I was previously able to retrieve practically all of Alexis Debat’s fake interviews, but as the days go on, fewer and fewer can be found. [Top]

CONCLUSION
Concerning the performance Microsoft claims, Eric Enge is right when he says:

Ultimately, the point is, you can't return the right result if the site you should be returning for a given search is not in your index.

That’s clear. But it’s even worse to have the site in your index and not understand that the “right” site is precisely that one! [Top]

P.S. Well, it seems that Yahoo! and Microsoft are not giving up. They must have read my post overnight!

I tried Yahoo! Search again (it was recently improved, other details here); the tool still offers no suggestions:

but it has finally correctly indexed the home page. Everything else was the same: 31 results total and only 2 of the site’s pages.

On Live Search, too, the indexing is now correct for 2 of the site’s pages, which are the only results offered.

Meanwhile, Google has gone from 17 to 47 pages indexed: now several lengths ahead of the competition.

That said, given the number of web pages on the Internet (???), it’s pretty remarkable to see a new site indexed in eight days on GYM. And it makes sense why the next steps in searching in 2010 will be:

1. search engine verticalization
2. personalization of results
3. universal search

Not to mention local search... [Top]

Microsoft Finds Its Groove To Counter Google

Microsoft unveiled new tools and an accreditation program to help advertisers improve the quality of their search advertising campaigns and help optimize web sites for Live Search.

1) adCenter which is similar to Google Adwords now has a Add-in for Excel 2007. It will enable adCenter customers to easily research keywords to help them reach and capture the right audience with their paid search advertising campaigns. Users of the adCenter can now rapidly build keyword lists and plan keyword strategy based on a variety of attributes including relevance, historical cost information and projected volume, and manipulate the data in the easy-to-use Excel format. The tool will help advertisers quickly understand keyword popularity and trends and gain valuable insight about demographic and localization information of actual queries.

"The adCenter Add-in for Excel raises the bar for search- and data-driven marketing tools. The ease of use with Excel and vast amount of keyword data are all extremely valuable for the online marketer," said Jeffrey Pruitt, executive vice president of Corporate Partnerships at iCrossing. "This product helps unlock the true power of search data, providing access to more data than any other engine, enabling increased understanding of consumer behavior and intent. Within minutes of using this tool, a savvy marketer will be able to discover new information to help drive more successful, consumer-driven campaign strategies."

Data accessible via the adCenter Add-in comes from Microsoft's Keyword Services Platform (KSP), a revolutionary set of Web service application programming interfaces related to keyword technologies, including keyword recommendation, forecasting, categorization and monetization. The adCenter Add-in, which will be available Jan. 8, 2008, provides easy access to the tremendous amount of data available through the KSP and is the latest technology from Microsoft adCenter Labs to be fully integrated into adCenter following customer trial and feedback.

2) Webmaster Center is a portal specifically designed for webmasters and search engine optimizers. It provides all the necessary resources to optimize a Web site for achieving the highest possible algorithmic or "organic" listing on Live Search. This includes information about how Live Search crawls and indexes site pages; site map creation and submission; statistics about Web sites currently indexed by Live Search; consolidated content submission guidelines; and new content and community resources.

3) adExcellence program provides agencies and advertisers with the opportunity to become certified adCenter experts similar to the Google Adwords Certification. The program offers more than 20 free training modules and a fee-based examination, providing users with the ability to demonstrate to their customers and prospects that they are fully trained and proficient in using adCenter. Accredited members will be listed in the adExcellence Membership Directory and will receive an adExcellence logo for use on their Web sites and marketing collateral.

Steve Ballmer On Google's Rising Power

On Android - "Right now they have a press release..."

25 Most Powerful People In Business

Fortune Magazine has come out with a list of the 25 most powerful people in business. At the top of the list is Apple's, Steve Jobs. Also in the top five are Eric Schmidt, Larry Page, and Sergey Brin of Google.

Other tech giants on the list include of course Bill Gates of Microsoft, John Chambers of Cisco, Mark Hurd of HP, and media mogul cum social networking giant by virtue of MySpace, Rupert Murdoch of NewsCorp. Complete list.

Zoho Taking WebApps Offline

Zoho, a provider of a suite of productivity web applications such as word processing, spreadsheets, and presentation tools announced that it has made its word processing app, Zoho Writer, available offline.

Akin to Google Apps and desktop based Microsoft Office, Zoho represents what can be deemed the next generation of Office 2.0 apps. Offline capability is enabled by Google Gears, an open source JavaScript browser extension. Writer users can now view and edit documents offline and synchronize their offline changes with the online versions of their docs and, as a result, eliminate costly downtime.

MSN Video surges in October

Microsoft Video showed a fairly significant market share gain in October, partly at Yahoo Video's expense. Alex at the Compete blog has an excellent graphic showing YouTube/Google with a commanding 54% market share. MSN, Yahoo, AOL, and MySpace Video all had about 8% of the market in October.

MSN was the big winner in October in terms of gains. YouTube/Google only rose about 1% while MSN was up 25% from September. This is a bit misleading since MSN's base number was so much lower, but it's a notable increase.

Brightcove's departure from this space is an indication that online video remains very competitive as well as posing a lot of difficulties monetizing the content.